Q: The company profile shows a dividend yield of 13.8%. Other sites show a modest yield of ~4.5%. 2 yearsago MRG.un paid 6 cents per share and today pays 20 cents which I interprete as a positive reason to own the stock, but I am puzzed why there is such difference inthe yield numbers. As you can tell by my question, I am tempted to buy a position but recognize high yields are often a warning sign. Is 13.8% yield sustainable? I have been burned in the past with this kind of dilemma. Appreciate your thoughts ....thanks
5i Research Answer:
4.43% is the correct current yield. Our data provider is in error here. It pays 6.3 cents monthly. The company is small and cyclical, and this does add extra risks. But it is priced well at 10X cash flow. It has a good history of (small) distribution increases, and did not cut its distribution during the pandemic. Payout ratio is below 50% and thus the dist. should be sustainable. We would consider it decent for higher-risk income. It is sensitivie to housing, interest rates and inflation and should be consider low growth.