BigBen Interactive (EPA:BIG) Will Pay A Dividend Of €0.30

The board of BigBen Interactive (EPA:BIG) has announced that it will pay a dividend of €0.30 per share on the 29th of July. This payment means the dividend yield will be 1.9%, which is below the average for the industry.

View our latest analysis for BigBen Interactive

BigBen Interactive's Earnings Easily Cover the Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, BigBen Interactive's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 19%, which makes us pretty comfortable with the sustainability of the dividend.

BigBen Interactive's Dividend Has Lacked Consistency

It's comforting to see that BigBen Interactive has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The first annual payment during the last 8 years was €0.15 in 2014, and the most recent fiscal year payment was €0.30. This implies that the company grew its distributions at a yearly rate of about 9.1% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth May Be Hard To Achieve

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. BigBen Interactive hasn't seen much change in its earnings per share over the last five years. BigBen Interactive is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

Our Thoughts On BigBen Interactive's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about BigBen Interactive's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for BigBen Interactive that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.