Foresight Environmental Infrastructure (LON:FGEN) Has Announced A Dividend Of £0.0195

The board of Foresight Environmental Infrastructure Limited (LON:FGEN) has announced that it will pay a dividend on the 27th of December, with investors receiving £0.0195 per share. This takes the dividend yield to 9.9%, which shareholders will be pleased with.

Check out our latest analysis for Foresight Environmental Infrastructure

Foresight Environmental Infrastructure's Distributions May Be Difficult To Sustain

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Despite not generating a profit, Foresight Environmental Infrastructure is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Over the next year, EPS could expand by 3.7% if recent trends continue. The company seems to be going down the right path, but it will probably take a little bit longer than a year to cross over into profitability. Unfortunately, for the dividend to continue at current levels the company definitely needs to get there sooner rather than later.

Foresight Environmental Infrastructure Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was £0.06 in 2014, and the most recent fiscal year payment was £0.0757. This works out to be a compound annual growth rate (CAGR) of approximately 2.4% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Foresight Environmental Infrastructure May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Earnings has been rising at 3.7% per annum over the last five years, which admittedly is a bit slow. With EPS growth hard to come by and the company not turning a profit, we wouldn't be particularly optimistic about the growth prospects for Foresight Environmental Infrastructure's dividend in the future.

Foresight Environmental Infrastructure's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Foresight Environmental Infrastructure will make a great income stock. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. We don't think Foresight Environmental Infrastructure is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Foresight Environmental Infrastructure that investors should know about before committing capital to this stock. Is Foresight Environmental Infrastructure not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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