Dalrymple Bay Infrastructure's (ASX:DBI) Upcoming Dividend Will Be Larger Than Last Year's

Dalrymple Bay Infrastructure Limited (ASX:DBI) will increase its dividend on the 19th of December to A$0.0613, which is 8.9% higher than last year's payment from the same period of A$0.0563. This takes the dividend yield to 5.2%, which shareholders will be pleased with.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Dalrymple Bay Infrastructure's Projections Indicate Future Payments May Be Unsustainable

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

The next 12 months is set to see EPS grow by 13.2%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 125% over the next year.

See our latest analysis for Dalrymple Bay Infrastructure

Dalrymple Bay Infrastructure Is Still Building Its Track Record

It is great to see that Dalrymple Bay Infrastructure has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of A$0.18 in 2020 to the most recent total annual payment of A$0.235. This implies that the company grew its distributions at a yearly rate of about 5.5% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Dalrymple Bay Infrastructure to be a consistent dividend paying stock.

Dalrymple Bay Infrastructure May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. However, Dalrymple Bay Infrastructure's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

We're Not Big Fans Of Dalrymple Bay Infrastructure's Dividend

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 isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. 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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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.