Barnes Group's (NYSE:B) Dividend Will Be $0.16

Barnes Group Inc.'s (NYSE:B) investors are due to receive a payment of $0.16 per share on 10th of September. This means the dividend yield will be fairly typical at 1.5%.

View our latest analysis for Barnes Group

Barnes Group Doesn't Earn Enough To Cover Its Payments

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, the company's dividend was much higher than its earnings. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

Over the next year, EPS is forecast to expand by 63.7%. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.

Barnes Group Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.44 in 2014, and the most recent fiscal year payment was $0.64. This means that it has been growing its distributions at 3.8% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Barnes Group's earnings per share has shrunk at 50% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Barnes Group's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. 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. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, Barnes Group has 4 warning signs (and 2 which make us uncomfortable) we think you should know about. Is Barnes Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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