Recognizing that, during any potential "long recession", can you give me a rough idea how safe their dividend would be relative to Canadian blue chip banks, pipelines, insurance companies and telecoms ? How well could they sustain their payout?
Would your opinion change in any way if that recession had stag-flation? I do already have some gold and commodities to hopefully hold me up in that regard.
Stagflation, or simply inflation, would likely hurt the stock quite a lot as investors would seek higher-paying alternatives. The lack of dividend increases would hurt its appeal in such a scenario as well. The company has not had an annual loss since 2001. Payout ratio is less than 30% Debt is a bit high but manageable. We would not really see the dividend at huge risk in the mid term. But it would be a change in government quotas or competition that would be more detrimental to the company, we think. Its busines is not overly sensitive to the economy. Sales only slipped slightly in 2008, for example. But we would still see the dividend as riskier than all the sectors mentioned in the question, on average. It is a small company and inherently riskier.