Yahoo Finance Brewin Dolphin Holdings (LON:BRW) Is Increasing Its Dividend To UK£0.11
Brewin Dolphin Holdings PLC (LON:BRW) will increase its dividend on the 9th of February to UK£0.11. This makes the dividend yield 4.4%, which is above the industry average.
View our latest analysis for Brewin Dolphin Holdings
Brewin Dolphin Holdings' Dividend Is Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Brewin Dolphin Holdings' dividend made up quite a large proportion of earnings but only 64% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.
EPS is set to grow by 10.9% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 80% which is a bit high but can definitely be sustainable.
Brewin Dolphin Holdings Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2011, the first annual payment was UK£0.071, compared to the most recent full-year payment of UK£0.16. This means that it has been growing its distributions at 8.3% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
Brewin Dolphin Holdings Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Brewin Dolphin Holdings has grown earnings per share at 5.4% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.
In Summary
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We would be a touch cautious of relying on this stock primarily for the dividend income.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 8 Brewin Dolphin Holdings analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
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