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Regular readers know that we love Simply Wall Street Dividends. Westshore Terminals Investment Corporation (TSE:WTE) is scheduled to trade ex-dividend within the next 3 days. Typically, the ex-dividend date is one business day before the record date, which is the date on which the company determines which shareholders are eligible to receive dividends. When buying or selling stocks, the ex-dividend date is important because it takes at least two business days for the trade to settle. This means that in order to receive the dividend, you must purchase shares of Westshore Terminals Investment by March 27th, and the dividend will be paid on April 15th.
The company’s upcoming dividend is C$0.725 per share, following a total distribution of C$1.40 per share to shareholders over the past 12 months. Calculating the last year’s worth of payments shows that Westshore Terminals Investments has a yield to maturity of 5.7% on the current share price of CA$26.18. We love to see companies pay dividends, but it’s also important to make sure our golden goose doesn’t die by laying golden eggs. As a result, readers should always check whether Westshore Terminals Investment has been able to grow its dividends, or if the dividends could be cut.
See our latest analysis for investing in Westshore Terminal.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. The dividend payout ratio is 75% of profits, which means that the majority of profits are distributed as dividends. Future earnings growth may be slower due to relatively limited reinvestment of profits. There may be concerns if revenues start to decline. But cash flow is more important than profit for assessing a dividend, so we need to see if the company generated enough cash to pay its dividend. Last year, the company paid out more than three-quarters (86%) of the free cash flow it generated, which is quite high and may start to limit its ability to reinvest in the business.
It’s reassuring to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.
Click here to see the company’s payout ratio and analyst estimates of its future dividends.
Are profits and dividends growing?
There is value in companies that aren’t growing earnings, but if you think a company will struggle to grow, then assessing the sustainability of its dividend is even more important. If profits decline and the company is forced to cut its dividend, investors could see the value of their investments explode. With that in mind, we’re not pleased to see Westshore Terminals Investment’s earnings per share have remained essentially flat over the past five years. Sure, it’s better than a stock price going down, but in the long run, all the best dividend stocks can significantly increase his earnings per share. Payout ratios as high as 75% typically occur when a company cannot find a better use for its cash. Combined with slow revenue growth over the past few years, Westshore Terminals Investment’s future growth prospects could be a sign that its prospects for growth are slim.
The main way most investors assess a company’s dividend prospects is by looking at its historical dividend growth rate. Westshore Terminals Investment has delivered an average dividend growth of 1.3% per year over the past 10 years.
Summary
Is Westshore Terminals Investment an attractive dividend stock, or should it be left on the shelf? Westshore Terminals Investments has struggled to grow its earnings per share and is paying out the majority of its profit and cash flow in the form of dividends, but it doesn’t look like its dividend payments are unsustainable. Overall, we’re not too bearish on the stock, but there may be better dividend investments out there.
So if you want to know more about Westshore Terminals Investments, you’ll find it worth knowing the risks this stock faces. To solve this, we discovered the following: 2 warning signs for Westshore Terminals investment. (1 is a little off-putting!) Here’s what you need to know before buying a stock.
Generally speaking, we don’t recommend just buying the first dividend stock you see.Here it is A curated list of interesting stocks with strong dividends.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
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