Dalrymple Bay Infrastructure Limited (ASX:DBI) has announced an increase in its dividend on the 13th of June to A$0.0538, a 7.0% raise from last year’s payment of A$0.0503 during the same period. This brings the dividend yield to 7.3%, which is good news for shareholders.
Prior to this announcement, the company was paying out 139% of its earnings and 78% of its cash flows. This could indicate that Dalrymple Bay Infrastructure is more focused on returning cash to shareholders rather than pursuing growth opportunities.
Although earnings per share is expected to increase by 36.1% over the next year, the payout ratio could reach 111%, which may not be sustainable without putting pressure on the balance sheet.
While the dividend history of Dalrymple Bay Infrastructure has been stable over the past 3 years, the company is still building its track record as a dividend payer. The annual total dividend has grown from A$0.18 in 2021 to A$0.215, showing a yearly growth rate of about 6.1%. However, with a short dividend payment history, it is uncertain if the dividend can be sustained over a full economic cycle.
Investors who have held shares in the company for the past few years have received good dividend income. Despite impressive earnings per share growth of 133% per year over the past three years, the company is paying out 139% of its earnings as dividends, which may not be sustainable without exceptional circumstances.
Overall, while the dividend is currently being raised, Dalrymple Bay Infrastructure may not be a great income stock in the long term. Investors should consider other factors besides dividend payments when analyzing the company. It is important to note that this article is general in nature and not intended as financial advice.