Computer Modelling Group's Dividend Reduced by 80%, Yield Remains Above Industry Average at 3.1%.

Computer Modelling Group's dividend has been reduced by 80% to CA$0.01, with a yield of 3.1%. The dividend is forecast to be well-covered by earnings, with EPS expected to expand by 6.2% over the next year. However, the dividend has been cut at least once in the last 10 years and EPS has been flat over the past five years, which may limit the company's ability to pay more every year.

Computer Modelling Group (CMG) has made significant changes to its financial strategy, including a substantial reduction in its dividend and a new strategic framework aimed at driving future growth. The company announced a 80% cut in its dividend, reducing it to CA$0.01 per share, with a yield of 3.1%. This move is part of CMG's broader strategy to redirect capital towards acquisitions and strategic initiatives, as outlined in their recent shareholder letter [1].

The dividend cut is forecast to be well-covered by earnings, with expected earnings per share (EPS) expanding by 6.2% over the next year. However, it is important to note that CMG has cut its dividend at least once in the past decade, and EPS has been relatively flat over the last five years. These historical trends may limit the company's ability to consistently increase its dividend in the future.

CMG's new strategic direction, dubbed "Act 2," is centered around a more focused capital allocation policy and a clearer acquisition framework. The company aims to deploy 100% of its available capital at attractive rates of return, with a particular emphasis on mergers and acquisitions (M&A) to expand its business portfolio [1].

The new M&A framework includes three categories: Core, Platform, and Standalone. These categories aim to broaden CMG's scope and enhance its competitive position. The company has already begun to execute on this strategy, with a focus on strategic relationships, bundling, and channel partnerships [1].

Despite the positive outlook, CMG faces near-term challenges. The company recently lost a long-standing reservoir customer due to aggressive discounting and competitive bundling by a global peer. This loss has led to a mid-single-digit sequential dip in recurring revenue and pressure on adjusted EBITDA. However, CMG's response has been specific and strategic, focusing on building stronger relationships and accelerating partnerships [1].

Institutional investors have shown interest in CMG's new strategic direction. Several investment firms, including S Bank Fund Management Ltd, Cloud Capital Management LLC, and HighMark Wealth Management LLC, have increased their stakes in CMG during the first quarter [2].

Overall, CMG's new strategic direction and dividend cut are significant moves aimed at driving future growth and enhancing shareholder value. However, the company's ability to consistently increase its dividend in the future will depend on its ability to execute on its strategic initiatives and maintain strong financial performance.

References:
[1] https://www.compoundwithrene.com/p/act-2-at-computer-modelling-group
[2] https://www.marketbeat.com/instant-alerts/filing-s-bank-fund-management-ltd-makes-new-441000-investment-in-chipotle-mexican-grill-inc-nysecmg-2025-08-14/