Keyera (TSE.KEY) will pay a Dividend of CA$0.16

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The board of Keyera Corp. (TSE:KEY) has announced that it will pay a dividend on the 16th of January, with investors receiving CA$0.16 per share. Based on this payment, the dividend yield will be 6.7% which is still higher that the industry average.

See our latest analysis for Keyera

Keyera’s Payment Offers Solid Earnings Protection

Although we love to see strong dividend yields it doesn’t necessarily mean the payout is sustainable. Keyera was making a significant portion of its earnings payments before the announcement. It wasn’t also generating positive free cash flow. We believe that this practice could make the dividend extremely risky in future.

In the future, earnings per share are expected to decline by 3.0% in the next year. We believe that the payout ratio could reach 91% if the dividend follows recent trends. That is definitely higher.

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Keyera Has A Solid Track Record

This company has a long history of paying stable dividends. In 2012, the company paid a total annual dividend of CA$1.02 and in 2012 it was CA$1.92. The company has grown its distributions at an average annual rate of 6.5% during this time. For a number years, the dividend has grown very well and has provided its shareholders with some nice income.

Keyera’s Dividend Could Lack Growth

Investors will be eager to acquire shares of the company’s stock, based on its history of dividend growth. Keyera has grown EPS by 12% annually over the past five year, which impressed us. While past earnings growth has been good, we don’t believe this business can grow without marketing or capital investment. We would generally expect the higher payout ratio in future to limit its growth prospects.

Summary

We are cautious about Keyera’s payments. There could be issues in the future with their sustainability. While we can’t deny the stability of the payments, we are concerned about the high payout ratio. If income is your main focus, Keyera is not a stock we recommend.

Market movements are a testament to the value of a consistent dividend program compared to one that is unpredictable. However, the importance of dividends is not the only factor that should be considered when assessing companies. Let’s go one step further. 2 warning signs for Keyera Investors must be aware of the importance of moving forward. Our dividend investing guide might be of interest to you. curated list of high yield dividend stocks.

Give feedback about this article Are you concerned about the content? Get in touch Get in touch with us. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St has a general nature. Our commentary is based only on historical data and analyst projections. It is not a recommendation not to buy or sell any stocks and it doesn’t take into account your financial situation or objectives. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis might not include the most recent announcements from price-sensitive companies or qualitative material. Simply Wall St holds no position in any of the stocks mentioned.

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