Bisalloy Steel Group (ASX:BIS) Is Increasing Its Dividend To A$0.115

Bisalloy Steel Group Limited (ASX:BIS) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of October to A$0.115. The payment will take the dividend yield to 5.4%, which is in line with the average for the industry.

See our latest analysis for Bisalloy Steel Group

Bisalloy Steel Group's Future Dividend Projections Appear Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. The last dividend was quite easily covered by Bisalloy Steel Group's earnings. This means that a large portion of its earnings are being retained to grow the business.

EPS is set to grow by 31.9% over the next year if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 83%, which is on the higher side, but certainly still feasible.

Bisalloy Steel Group's Dividend Has Lacked Consistency

It's comforting to see that Bisalloy Steel Group has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The annual payment during the last 9 years was A$0.04 in 2015, and the most recent fiscal year payment was A$0.195. This means that it has been growing its distributions at 19% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Bisalloy Steel Group has grown earnings per share at 32% per year over the past five years. Bisalloy Steel Group is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like Bisalloy Steel Group's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Bisalloy Steel Group that investors should know about before committing capital to this stock. 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.