Yahoo Finance Is It Worth Considering Boston Pizza Royalties Income Fund (TSE:BPF.UN) For Its Upcoming Dividend?
Boston Pizza Royalties Income Fund (TSE:BPF.UN) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase Boston Pizza Royalties Income Fund's shares on or after the 20th of November will not receive the dividend, which will be paid on the 30th of November.
The company's next dividend payment will be CA$0.11 per share, and in the last 12 months, the company paid a total of CA$1.28 per share. Looking at the last 12 months of distributions, Boston Pizza Royalties Income Fund has a trailing yield of approximately 8.3% on its current stock price of CA$15.53. If you buy this business for its dividend, you should have an idea of whether Boston Pizza Royalties Income Fund's dividend is reliable and sustainable. As a result, readers should always check whether Boston Pizza Royalties Income Fund has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Boston Pizza Royalties Income Fund
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Boston Pizza Royalties Income Fund paid out 74% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Boston Pizza Royalties Income Fund generated enough free cash flow to afford its dividend. Over the last year, it paid out more than three-quarters (76%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.
It's positive to see that Boston Pizza Royalties Income Fund's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Boston Pizza Royalties Income Fund earnings per share are up 2.1% per annum over the last five years. A high payout ratio of 74% generally happens when a company can't find better uses for the cash. Combined with slim earnings growth in the past few years, Boston Pizza Royalties Income Fund could be signalling that its future growth prospects are thin.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Boston Pizza Royalties Income Fund has lifted its dividend by approximately 0.9% a year on average.
The Bottom Line
Has Boston Pizza Royalties Income Fund got what it takes to maintain its dividend payments? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. Overall, it's hard to get excited about Boston Pizza Royalties Income Fund from a dividend perspective.
So if you want to do more digging on Boston Pizza Royalties Income Fund, you'll find it worthwhile knowing the risks that this stock faces. In terms of investment risks, we've identified 2 warning signs with Boston Pizza Royalties Income Fund and understanding them should be part of your investment process.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
