Bulmetal JSC's (BUL:BMTL) Dividend Will Be Increased To BGN0.105

Bulmetal JSC (BUL:BMTL) has announced that it will be increasing its periodic dividend on the 21st of July to BGN0.105, which will be 50% higher than last year's comparable payment amount of BGN0.07. Despite this raise, the dividend yield of 0.8% is only a modest boost to shareholder returns.

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Bulmetal JSC's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, Bulmetal JSC's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, EPS could fall by 22.7% 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, we estimate the payout ratio could be 33%, which is definitely feasible to continue.

See our latest analysis for Bulmetal JSC

Bulmetal JSC Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Limited Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Bulmetal JSC has seen earnings per share drop by 23% over the last year. A one off decline isn't a massive problem, but if it continues it could start to cause larger issues. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

Our Thoughts On Bulmetal JSC's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Bulmetal JSC's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for Bulmetal JSC (of which 1 is a bit unpleasant!) you should know about. Is Bulmetal JSC not quite the opportunity you were looking for? Why not check out our selection of top 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.