Dalrymple Bay Infrastructure (ASX:DBI) Has Announced That It Will Be Increasing Its Dividend To A$0.0588

Dalrymple Bay Infrastructure Limited (ASX:DBI) will increase its dividend on the 12th of June to A$0.0588, which is 9.3% higher than last year's payment from the same period of A$0.0538. This takes the dividend yield to 5.5%, which shareholders will be pleased with.

We've discovered 2 warning signs about Dalrymple Bay Infrastructure. View them for free.

Dalrymple Bay Infrastructure's Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

Over the next year, EPS is forecast to expand by 41.8%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 105% over the next year.

See our latest analysis for Dalrymple Bay Infrastructure

Dalrymple Bay Infrastructure Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 4 years was A$0.18 in 2021, and the most recent fiscal year payment was A$0.225. This means that it has been growing its distributions at 5.7% per annum over that time. Dalrymple Bay Infrastructure has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

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. However, initial appearances might be deceiving. Over the past three years, it looks as though Dalrymple Bay Infrastructure's EPS has declined at around 14% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Dalrymple Bay Infrastructure's Dividend Doesn't Look Great

In summary, investors will like to be receiving a higher dividend, but we have some questions about whether it can be sustained over the long term. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. The dividend doesn't inspire confidence that it will provide solid income in the future.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 2 warning signs for Dalrymple Bay Infrastructure that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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