Brookfield Business (NYSE:BBUC) Is Paying Out A Dividend Of $0.0625

Brookfield Business Corporation (NYSE:BBUC) has announced that it will pay a dividend of $0.0625 per share on the 29th of March. This means the annual payment will be 1.0% of the current stock price, which is lower than the industry average.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Brookfield Business' stock price has increased by 54% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Brookfield Business

Brookfield Business Might Find It Hard To Continue The Dividend

If it is predictable over a long period, even low dividend yields can be attractive. Even in the absence of profits, Brookfield Business is paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

If nothing changes, EPS could fall just as dramatically this year as it has recently. This could force the company to make difficult decisions around continuing payouts to shareholders or putting additional pressure on the balance sheet.

Brookfield Business Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The payments haven't really changed that much since 2 years ago. Brookfield Business hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. EPS has fallen over the last year, with this year's number 461% below last year. Decreases in earnings as large as this could start to put some pressure on the dividend if they are sustained for several years. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

Brookfield Business' Dividend Doesn't Look Great

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Brookfield Business that investors need to be conscious of moving forward. Is Brookfield Business not quite the opportunity you were looking for? Why not check out our selection of top 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.