In This Article:
Schroder BSC Social Impact Trust plc (LON:SBSI) will increase its dividend on the 20th of December to £0.0294, which is 28% higher than last year's payment from the same period of £0.023. This makes the dividend yield about the same as the industry average at 2.9%.
Check out our latest analysis for Schroder BSC Social Impact Trust
Schroder BSC Social Impact Trust's Projections Indicate Future Payments May Be Unsustainable
Estimates Indicate Schroder BSC Social Impact Trust's Could Struggle to Maintain Dividend Payments In The Future
Schroder BSC Social Impact Trust's Future Dividends May Potentially Be At Risk
We aren't too impressed by dividend yields unless they can be sustained over time. Schroder BSC Social Impact Trust is not generating a profit, and despite this is paying out most of its free cash flow as a dividend. Generally it is unsustainable for a company to be paying a dividend while unprofitable, and with limited reinvestment into the business growth may be slow.
Looking forward, EPS could fall by 30.7% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 427%, which is definitely a bit high to be sustainable going forward.
Schroder BSC Social Impact Trust Doesn't Have A Long Payment History
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of £0.0105 in 2021 to the most recent total annual payment of £0.023. This implies that the company grew its distributions at a yearly rate of about 30% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
Dividend Growth Potential Is Shaky
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Schroder BSC Social Impact Trust's EPS has fallen by approximately 31% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.
The Dividend Could Prove To Be Unreliable
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.