Insignia Financial Ltd. (ASX:IFL) has announced a dividend payout of A$0.093 per share, scheduled for April 3rd. Despite the cut, the dividend yield of 7.3% is still a significant boost for shareholders. However, concerns have been raised about the sustainability of the dividend as the company is not generating a profit or free cash flows.
Even though earnings per share are expected to rise in the next year, the payout ratio could reach an unsustainable 193%. The company has a history of dividend cuts, with the payout decreasing by around 7.8% annually since 2014. Furthermore, with earnings per share declining by 14% over the last five years, there are doubts about the growth potential of the dividend in the future.
Overall, the dividend situation at Insignia Financial does not look promising. The high payout level, coupled with low earnings and inconsistent growth, makes the dividend vulnerable. Investors looking for stable dividend opportunities may want to consider other factors before investing in this stock, as indicated by warning signs and the company’s historical performance.
