Yahoo Finance Dream Unlimited (TSE:DRM) Is Increasing Its Dividend To CA$0.15
Dream Unlimited Corp.'s (TSE:DRM) dividend will be increasing from last year's payment of the same period to CA$0.15 on 28th of March. This takes the dividend yield to 3.0%, which shareholders will be pleased with.
Check out our latest analysis for Dream Unlimited
Dream Unlimited's Payment Has Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Despite not generating a profit, Dream Unlimited is still paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.
According to analysts, EPS should be several times higher next year. If the dividend extends its recent trend, estimates say the dividend could reach 3.1%, which we would be comfortable to see continuing.
Dream Unlimited Doesn't Have A Long Payment History
It is great to see that Dream Unlimited has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2019, the dividend has gone from CA$0.20 total annually to CA$0.60. This works out to be a compound annual growth rate (CAGR) of approximately 25% a year over that time. Dream Unlimited has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
Dividend Growth Potential Is Shaky
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though Dream Unlimited's EPS has declined at around 20% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.
Dream Unlimited's Dividend Doesn't Look Great
In conclusion, we have some concerns about this dividend, even though it being raised is good. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, the dividend is not reliable enough to make this a good income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 3 warning signs for Dream Unlimited that investors should take into consideration. Is Dream Unlimited not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
