雅虎香港財經 BBGI Global Infrastructure's (LON:BBGI) Upcoming Dividend Will Be Larger Than Last Year's
The board of BBGI Global Infrastructure S.A. (LON:BBGI) has announced that the dividend on 19th of October will be increased to £0.0397, which will be 6.0% higher than last year's payment of £0.0374 which covered the same period. This will take the dividend yield to an attractive 5.3%, providing a nice boost to shareholder returns.
Check out our latest analysis for BBGI Global Infrastructure
BBGI Global Infrastructure Doesn't Earn Enough To Cover Its Payments
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, BBGI Global Infrastructure was paying out a fairly large proportion of earnings, and it wasn't generating positive free cash flows either. We think that this practice can make the dividend quite risky in the future.
Looking forward, EPS could fall by 14.4% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could reach 175%, which could put the dividend in jeopardy if the company's earnings don't improve.
BBGI Global Infrastructure Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was £0.055 in 2013, and the most recent fiscal year payment was £0.0748. This means that it has been growing its distributions at 3.1% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
The Dividend Has Limited Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Earnings per share has been sinking by 14% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.
Our Thoughts On BBGI Global Infrastructure's Dividend
Overall, we always like to see the dividend being raised, but we don't think BBGI Global Infrastructure will make a great income stock. While BBGI Global Infrastructure is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for BBGI Global Infrastructure that investors should take into consideration. Is BBGI Global Infrastructure not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
