Fortress Transportation and Infrastructure Investors LLC's (NASDAQ:FTAI) investors are due to receive a payment of US$0.33 per share on 24th of May. This means the annual payment is 6.3% of the current stock price, which is above the average for the industry.
Fortress Transportation and Infrastructure Investors Might Find It Hard To Continue The Dividend
A big dividend yield for a few years doesn't mean much if it can't be sustained. Even in the absence of profits, Fortress Transportation and Infrastructure Investors is paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.
Analysts expect the EPS to grow by 71.7% over the next 12 months. The company seems to be going down the right path, but it will take a little bit longer than a year to cross over into profitability. Unless this happens fairly soon, the dividend could start to come under pressure.
Fortress Transportation and Infrastructure Investors Is Still Building Its Track Record
It is great to see that Fortress Transportation and Infrastructure Investors has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The last annual payment of US$1.32 was flat on the first annual payment 7 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
The Dividend Has Limited Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Over the past five years, it looks as though Fortress Transportation and Infrastructure Investors' EPS has declined at around 45% a year. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.
The company has also been raising capital by issuing stock equal to 16% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
Fortress Transportation and Infrastructure Investors' Dividend Doesn't Look Great
Overall, while some might be pleased that the dividend wasn't cut, we think this may help Fortress Transportation and Infrastructure Investors make more consistent payments in the future. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Fortress Transportation and Infrastructure Investors has 4 warning signs (and 2 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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