Bird Construction (TSE:BDT) Is Due To Pay A Dividend Of CA$0.033

Bird Construction Inc. (TSE:BDT) will pay a dividend of CA$0.033 on the 20th of July. This means the annual payment is 4.0% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Bird Construction

Bird Construction's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Bird Construction's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 4.2%. If the dividend continues on this path, the payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

Bird Construction's Track Record Isn't Great

The dividend hasn't seen any major cuts in the last 10 years, but it has slowly been decreasing. Since 2011, the first annual payment was CA$0.60, compared to the most recent full-year payment of CA$0.39. This works out to be a decline of approximately 4.2% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Has Growth Potential

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Bird Construction has seen EPS rising for the last five years, at 7.4% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

The company has also been raising capital by issuing stock equal to 25% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like Bird Construction's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Bird Construction that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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