The board of Bird Construction Inc. (TSE:BDT) has announced that it will pay a dividend of CA$0.033 per share on the 19th of August. This makes the dividend yield 5.2%, which will augment investor returns quite nicely.
Bird Construction's Earnings Easily Cover the Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Bird Construction's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
The next year is set to see EPS grow by 34.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 32% by next year, which is in a pretty sustainable range.
Bird Construction's Track Record Isn't Great
The dividend is currently lower than it was 10 years ago, indicating that there has been a downward trend over that time. The dividend has gone from CA$0.66 in 2012 to the most recent annual payment of CA$0.39. Doing the maths, this is a decline of about 5.1% per year. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend Looks Likely To Grow
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Bird Construction has seen EPS rising for the last five years, at 20% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.
Bird Construction Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Bird Construction might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Bird Construction that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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