Braemar's (LON:BMS) Dividend Is Being Reduced To £0.025

Braemar Plc (LON:BMS) is reducing its dividend from last year's comparable payment to £0.025 on the 8th of September. The dividend yield will be in the average range for the industry at 2.9%.

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Braemar's Future Dividend Projections Appear Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Braemar's dividend made up quite a large proportion of earnings but only 41% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, earnings per share is forecast to rise by 63.8% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 19% which would be quite comfortable going to take the dividend forward.

View our latest analysis for Braemar

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from £0.26 total annually to £0.07. The dividend has fallen 73% over that period. A company that decreases its dividend over time generally isn't what we are looking for.

Braemar May Find It Hard To Grow The Dividend

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Braemar hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Braemar's Dividend

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 3 warning signs for Braemar that investors should take into consideration. 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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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.