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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Bird Construction Inc. (TSE:BDT) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Bird Construction's shares before the 31st of December in order to be eligible for the dividend, which will be paid on the 20th of January.
The company's next dividend payment will be CA$0.07 per share. Last year, in total, the company distributed CA$0.84 to shareholders. Based on the last year's worth of payments, Bird Construction stock has a trailing yield of around 3.2% on the current share price of CA$26.28. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Bird Construction has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Bird Construction
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Bird Construction paying out a modest 30% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 53% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Bird Construction's earnings have been skyrocketing, up 26% per annum for the past five years.