Board from Manuk Construction Inc. (TSE:BDT) has announced that it will pay a dividend on August 20, with investors receiving CA$0.0467 per share. This will bring the dividend yield to an attractive 2.1%, providing a good boost to shareholder returns.
While dividend yield is important for income investors, it is also important to consider any large share price movements, as this will generally exceed any gains from distributions. Investors will be pleased to see that Bird Construction’s share price has risen 42% over the past 3 months, which is good for shareholders and may also explain the drop in dividend yield.
Shares of Bird Construction, Inc
The next dividend payment on Bird Construction shares has been closed for good
The dividend yield is great, but it doesn’t matter if the payouts don’t work out. However, prior to this announcement, Bird Construction’s dividend was covered by cash flow and earnings. As a result, a large proportion of what is earned is reinvested in the business.
Next year, EPS is forecast to increase by 32.8%. If the dividend continues on this path, the payout ratio can be 23% next year, which we think can be quite sustainable going forward.
Dividend volatility
The company’s dividend history is marked by volatility, with at least one cut in the past 10 years. As of 2014, the annual payout at that time was CA$0.76, compared to the most recent payout of CA$0.56. Dividends have declined by about 3.0% annually over that period. A company that cuts its dividend over time is generally not what you want.
Dividends Look Likely to Rise
Since the dividend has been cut in the past, we need to check if earnings are increasing and if this could lead to a stronger dividend in the future. We are encouraged to see that Bird Construction has increased earnings per share at 31% annually over the past five years. A low payout ratio gives the company a lot of flexibility, and high earnings also make it very easy to grow dividends.
Bird construction looks like a good dividend stock
Overall, increasing dividends is always good, and we think that Bird Construction is a strong income stock thanks to its track record and high earnings. Companies easily earn enough to cover dividend payments and it’s great that those earnings translate into cash flow. All in all, this checks off a lot of the boxes we look for when picking income stocks.
It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an uncertain policy. Meanwhile, despite the importance of dividend payments, it is not the only factor readers should be aware of when evaluating a company. Taking the debate a bit further, we have identified 1 warning sign for Bird Construction that investors should remember moving forward. Looking for higher dividend ideas? Try us 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 using only unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock, and does not take into account your goals, 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. Only Wall St does not have a position in the mentioned stocks.
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