Badger Infrastructure Solutions' (TSE:BDGI) Dividend Will Be Increased To $0.1875

Badger Infrastructure Solutions Ltd. (TSE:BDGI) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of April to $0.1875. This takes the dividend yield to 1.8%, which shareholders will be pleased with.

View our latest analysis for Badger Infrastructure Solutions

Badger Infrastructure Solutions' Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Badger Infrastructure Solutions' dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 106.4%. If the dividend continues on this path, the payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from $0.328 total annually to $0.499. This means that it has been growing its distributions at 4.3% per annum over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Badger Infrastructure Solutions hasn't seen much change in its earnings per share over the last five years. While growth may be thin on the ground, Badger Infrastructure Solutions could always pay out a higher proportion of earnings to increase shareholder returns.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 Badger Infrastructure Solutions 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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