Briscoe Group (NZSE:BGP) Has Announced That It Will Be Increasing Its Dividend To NZ$0.1882

Briscoe Group Limited's (NZSE:BGP) dividend will be increasing from last year's payment of the same period to NZ$0.1882 on 30th of March. Based on this payment, the dividend yield for the company will be 5.9%, which is fairly typical for the industry.

Check out our latest analysis for Briscoe Group

Briscoe Group's Earnings Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. The last payment made up 71% of earnings, but cash flows were much higher. 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.

Earnings per share could rise by 7.4% over the next year if things go the same way as they have for the last few years. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 83%, which is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of NZ$0.11 in 2013 to the most recent total annual payment of NZ$0.28. This works out to be a compound annual growth rate (CAGR) of approximately 9.8% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Briscoe Group might have put its house in order since then, but we remain cautious.

We Could See Briscoe Group's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Briscoe Group has been growing its earnings per share at 7.4% a year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Briscoe Group that investors need to be conscious of moving forward. Is Briscoe Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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