Brunel International (AMS:BRNL) Has Affirmed Its Dividend Of €0.55

The board of Brunel International N.V. (AMS:BRNL) has announced that it will pay a dividend of €0.55 per share on the 12th of June. The dividend yield will be 5.2% based on this payment which is still above the industry average.

See our latest analysis for Brunel International

Brunel International's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Brunel International's dividend made up quite a large proportion of earnings but only 32% of free cash flows. This leaves plenty of cash for reinvestment into the business.

The next year is set to see EPS grow by 115.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The payments haven't really changed that much since 10 years ago. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

Brunel International Might Find It Hard To Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Brunel International has seen EPS rising for the last five years, at 51% per annum. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why Brunel International is not retaining those earnings to reinvest in growth.

Our Thoughts On Brunel International's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. 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.

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 example, we've picked out 1 warning sign for Brunel International that investors should know about before committing capital to this stock. 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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