Yahoo Finance Billington Holdings (LON:BILN) Is Increasing Its Dividend To £0.33
Billington Holdings Plc's (LON:BILN) dividend will be increasing from last year's payment of the same period to £0.33 on 2nd of July. This makes the dividend yield about the same as the industry average at 3.8%.
See our latest analysis for Billington Holdings
Billington Holdings' Earnings Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, prior to this announcement, Billington Holdings' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to fall by 53.9% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 92%, which is definitely on the higher side.
Billington Holdings' Dividend Has Lacked Consistency
Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the dividend has gone from £0.03 total annually to £0.20. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
The Dividend Looks Likely To Grow
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Billington Holdings has grown earnings per share at 20% per year over the past five years. Billington Holdings definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Billington Holdings Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Billington Holdings is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Billington Holdings you should be aware of, and 1 of them doesn't sit too well with us. 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.
