TORONTO - Dexterra Group Inc. (TSE:DXT), a service provider listed on the Toronto Stock Exchange, declared a dividend of CA$0.0875 per share today, with payment scheduled for January 15th. The company's dividend yield stands at an impressive 6.1%, surpassing industry averages.
Dexterra has been reinvesting its earnings to fuel business growth, which has allowed for a comfortable coverage of the announced dividend. The firm is projecting a significant rise in earnings per share (EPS) by 126.7% in the coming year. With the current trend of dividends, they expect to maintain a sustainable payout ratio of 51%.
The company has only a three-year history of distributing dividends but has seen an annual growth rate of 5.3% in its dividend payouts, increasing from CA$0.30 in 2020 to CA$0.35 recently. Alongside this, Dexterra has shown a steady annual earnings growth rate of about 2.1% over the past five years.
Should Dexterra face challenges in identifying profitable investments, the company may opt to increase the payout ratio as a way to reward shareholders. Despite the relatively short history of dividends and two warning signs that investors should be aware of, Dexterra Group's consistent dividend policy, favorable payout ratio, and strong anticipated EPS growth coupled with a solid yield suggest it is positioning itself for future success. Investors are advised to exercise vigilance due to its brief dividend history and the mentioned cautionary factors.
Insights from InvestingPro
According to real-time data provided by InvestingPro, Dexterra Group Inc.'s net profit margin for the last twelve months as of Q1 2023 stands at 4.5%. This metric, above the industry average of 3.2%, is indicative of the company's efficient operations and profitability. Additionally, the firm's return on equity (ROE) for Q1 2023 is 11.6%, demonstrating its effectiveness in generating profits from shareholders' equity.
InvestingPro Tips suggest that investors should consider Dexterra's solid financial performance and its commitment to rewarding shareholders via dividends. The first tip emphasizes the importance of a company's profit margin and ROE in evaluating its financial health and profitability. The second tip recommends investors to consider the firm's dividend policy and payout ratio, as these are indicators of its commitment to returning value to shareholders.
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