B. Riley Financial (NASDAQ:RILY) Is Due To Pay A Dividend Of $1.00

B. Riley Financial, Inc. (NASDAQ:RILY) has announced that it will pay a dividend of $1.00 per share on the 21st of August. This makes the dividend yield 7.2%, which will augment investor returns quite nicely.

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 B. Riley Financial's stock price has increased by 93% 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 B. Riley Financial

B. Riley Financial's Distributions May Be Difficult To Sustain

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. B. Riley Financial is unprofitable despite paying a dividend, and it is paying out 176% of its free cash flow. This is quite a strong warning sign that the dividend may not be sustainable.

If the trend of the last few years continues, EPS will grow by 13.0% over the next 12 months. This is the right direction to be moving, but it is probably not enough to achieve profitability. Unless this can be done in short order, the dividend might be difficult to sustain.

B. Riley Financial's Dividend Has Lacked Consistency

Looking back, B. Riley Financial's dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. Since 2014, the annual payment back then was $0.12, compared to the most recent full-year payment of $4.00. This implies that the company grew its distributions at a yearly rate of about 48% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Company Could Face Some Challenges Growing The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. B. Riley Financial has seen EPS rising for the last five years, at 13% per annum. Unprofitable companies aren't normally our pick for a dividend stock, but we like the growth that we have been seeing. As long as the company becomes profitable soon, it is on a trajectory that could see it being a solid dividend payer.

B. Riley Financial's Dividend Doesn't Look Sustainable

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 general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 4 warning signs for B. Riley Financial (2 make us uncomfortable!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.