Yahoo Finance Only Two Days Left To Cash In On Brookfield Infrastructure's (NYSE:BIPC) Dividend
Brookfield Infrastructure Corporation (NYSE:BIPC) is about to trade ex-dividend in the next 2 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Brookfield Infrastructure's shares before the 29th of November to receive the dividend, which will be paid on the 31st of December.
The company's next dividend payment will be US$0.51 per share, on the back of last year when the company paid a total of US$2.04 to shareholders. Calculating the last year's worth of payments shows that Brookfield Infrastructure has a trailing yield of 3.4% on the current share price of $60.72. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Brookfield Infrastructure
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Brookfield Infrastructure reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable.
Click here to see how much of its profit Brookfield Infrastructure paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Brookfield Infrastructure was unprofitable last year, although, we can see that at least its loss per share reduced by 64% on the previous year.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Brookfield Infrastructure has delivered an average of 2.5% per year annual increase in its dividend, based on the past two years of dividend payments.
Remember, you can always get a snapshot of Brookfield Infrastructure's financial health, by checking our visualisation of its financial health, here.
The Bottom Line
Should investors buy Brookfield Infrastructure for the upcoming dividend? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.
So if you want to do more digging on Brookfield Infrastructure, you'll find it worthwhile knowing the risks that this stock faces. For instance, we've identified 4 warning signs for Brookfield Infrastructure (2 don't sit too well with us) you should be aware of.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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