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Before the ex-dividend date on November 29th, investors are eyeing Freehold Royalties (OTC:) Ltd. as the company prepares to distribute a dividend of CA$0.09 per share on December 15th. To be eligible for this payout, shareholders must own shares before the ex-dividend date, considering the current share price of CA$14.42 (USD1 = CAD1.3690) which offers a yield of approximately 7.5%.
Investors have noted that although Freehold Royalties has been able to maintain its dividends within cash flow limits, there are sustainability concerns due to dividends exceeding profits by 118%. Over the past decade, there has been an average annual decrease in dividend payments of 4.3%, even as the company reports robust annual earnings growth at a rate of 55%. The high payout ratio stands at 76%, signaling that while dividends contribute significantly to investment returns, careful scrutiny is necessary when evaluating the company’s long-term payout capacity.
The divergence between increasing earnings and decreasing dividends suggests that investors should pay close attention to Freehold Royalties’ fiscal stability and consider potential warning signs related to its future performance before making investment decisions.
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