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The board of Badger Infrastructure Solutions Ltd. (TSE:BDGI) has announced that it will pay a dividend of $0.1875 per share on the 15th of July. This makes the dividend yield 1.8%, which will augment investor returns quite nicely.
Our free stock report includes 1 warning sign investors should be aware of before investing in Badger Infrastructure Solutions. Read for free now.
Badger Infrastructure Solutions' Projected Earnings Seem Likely To Cover Future Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Badger Infrastructure Solutions' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
The next year is set to see EPS grow by 26.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 43% by next year, which is in a pretty sustainable range.
Check out our latest analysis for Badger Infrastructure Solutions
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was $0.329, compared to the most recent full-year payment of $0.519. This works out to be a compound annual growth rate (CAGR) of approximately 4.7% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
The Dividend's Growth Prospects Are Limited
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Earnings have grown at around 4.2% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Badger Infrastructure Solutions could always pay out a higher proportion of earnings to increase shareholder returns.
Our Thoughts On Badger Infrastructure Solutions' Dividend
Overall, a consistent dividend is a good thing, and we think that Badger Infrastructure Solutions has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Badger Infrastructure Solutions that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.