Computer Modelling Group (TSE:CMG) Is Due To Pay A Dividend Of CA$0.05 – Simply Wall St
The board of Computer Modelling Group Ltd. (TSE:CMG) has announced that it will pay a dividend on the 15th of December, with investors receiving CA$0.05 per share. This means the annual payment is 3.7% of the current stock price, which is above the average for the industry.
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If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Computer Modelling Group's dividend made up quite a large proportion of earnings but only 62% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.
Over the next year, EPS is forecast to expand by 13.3%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 68% which brings it into quite a comfortable range.
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of CA$0.31 in 2012 to the most recent total annual payment of CA$0.20. The dividend has shrunk at around 4.3% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Computer Modelling Group's EPS has declined at around 3.4% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Computer Modelling Group is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Computer Modelling Group that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Find out whether Computer Modelling Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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Computer Modelling Group Ltd., a computer software technology company, develops and licenses reservoir simulation software in Canada and internationally.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
Read more about these checks in the individual report sections or in our analysis model.
Flawless balance sheet with acceptable track record.
Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.
Computer Modelling Group Ltd., a computer software technology company, develops and licenses reservoir simulation software in Canada and internationally.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
Read more about these checks in the individual report sections or in our analysis model.
Flawless balance sheet with acceptable track record.
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