Badger Infrastructure Solutions (TSE:BDGI) Has Announced A Dividend Of $0.1875

Badger Infrastructure Solutions Ltd. (TSE:BDGI) has announced that it will pay a dividend of $0.1875 per share on the 15th of July. This means the annual payment is 1.8% of the current stock price, which is above the average for the industry.

Our free stock report includes 1 warning sign investors should be aware of before investing in Badger Infrastructure Solutions. Read for free now.

Badger Infrastructure Solutions' Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, Badger Infrastructure Solutions' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 26.3%. If the dividend continues on this path, the payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Badger Infrastructure Solutions

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was $0.329 in 2015, and the most recent fiscal year payment was $0.519. This means that it has been growing its distributions at 4.7% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Dividend Growth May Be Hard To Achieve

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. Earnings has been rising at 4.2% per annum over the last five years, which admittedly is a bit slow. If Badger Infrastructure Solutions is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On Badger Infrastructure Solutions' Dividend

Overall, we think Badger Infrastructure Solutions is a solid choice as a dividend stock, even though the dividend wasn't raised this year. 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.

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 instance, we've picked out 1 warning sign for Badger Infrastructure Solutions that investors should take into consideration. Is Badger Infrastructure Solutions not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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