With dividend payout ratios over the last 12 months exceeding net income by more than 100%, the TSX stocks on our list may soon be forced to cut its dividend
SmallCapPower | December 12, 2016: A company can only maintain its dividend at a certain level if its net income is greater than the payout. Generally, a dividend payout ratio, expressed as a percentage of net income, less than 60% is seen as healthy and not at risk of being cut should the business have a weak quarter or year. The TSX stocks on our list today may be in for a tough decision ahead: either reduce or cut its dividend altogether, as over the last 12 months they have been paying out dividends at over 100% of their net income for that same period.
Atrium Mortgage Investment Corp. (TSE:AI) – $12.00
Corporate Financial Services
Atrium Mortgage Investment Corporation is a Canada-based non-bank lender that invests in mortgages secured by residential, multi-residential and commercial real property located in Canada. The Company lends in urban centers and focuses on loans that cannot be placed with financial institutions. Its investment objectives are to preserve its shareholders’ equity and to provide its shareholders with stable and secure dividends from its investments in mortgage loans.
- Market Cap: $324.51(mm)
- Dividend per Share – Actual (LTM, CAD): $0.95
- Net Income – Actual (LTM, Millions, CAD): $25.19
- Payout Ratio: 101%
Innergex Renewable Energy Inc. (TSE:INE) – $13.90
Electric Utilities
Innergex Renewable Energy Inc. is an independent renewable power producer that is a developer, owner and operator of renewable power-generating facilities with a focus on hydroelectric, wind power and solar photovoltaic (PV) projects. It operates through four segments: hydroelectric generation, wind power generation, solar power generation and site development. The Company owns interests in approximately 30 hydroelectric facilities.
- Market Cap: 1,504(mm)
- Dividend per Share – Actual (LTM, CAD): 63.5%
- Net Income – Actual (LTM, Millions, CAD): $27.72
- Payout Ratio: 238%
Labrador Iron Ore Royalty Corp. (TSE:LIF) – $20.41
Iron & Steel
Labrador Iron Ore Royalty Corporation (LIORC) is a Canada-based company that owns interests in Iron Ore Company of Canada (IOC), which operates an iron mine near Labrador City, Newfoundland and Labrador on lands leased from LIORC. The Company, through its subsidiary, Hollinger-Hanna Limited (Hollinger-Hanna), holds approximately 15.10% equity interest in IOC. IOC has the capacity to extract approximately 50 million tons of crude ore annually.
- Market Cap: 1,306(mm)
- Dividend per Share – Actual (LTM, CAD): 100.0%
- Net Income – Actual (LTM, Millions, CAD): $50.64
- Payout Ratio: 126%
Nevsun Resources Ltd. (TSE:NSU) – $4.50
Specialty Mining & Metals
Nevsun Resources Ltd is a Canada-based base metals mining company that is engaged in the acquisition, exploration, development and operation of mineral property interests. Its principal property is the Bisha Property, which hosts a gold, copper and zinc deposit, and includes satellite volcanogenic massive sulfides (VMS) deposits at Harena, Northwest, Hambok, Aderat and Asheli. The Company’s principal mining operation is the Bisha Mine, an open pit copper-zinc mine. The Company also develops the Timok copper and gold project, which is located in Serbia.
- Market Cap: 1,355(mm)
- Dividend per Share – Actual (LTM, CAD): 21.1%
- Net Income – Actual (LTM, Millions, CAD): $23.55
- Payout Ratio: 179%
Russel Metals Inc. (TSE:RUS) – $27.34
Iron & Steel
Russel Metals Inc. is a metals distribution company. Its segments include metals service centers, energy products and steel distributors. The metals service centers segment provides processing and distribution services to a base of end users. Its Energy Products segment distributes oil country tubular goods (OCTG), line pipe, valves and fittings to the energy industry. The Steel distributors segment distributes, sells steel to other steel service centers and equipment manufacturers. Its metals service centers provide a line of products in various sizes, shapes and specifications, including carbon hot rolled and cold finished steel, pipe and tubular products, stainless steel and aluminum.
- Market Cap: $1,687.25(mm)
- Dividend per Share – Actual (LTM, CAD): $1.52
- Net Income – Actual (LTM, Millions, CAD): $53.48
- Payout Ratio: 175%
