Yahoo Finance Bunge's (NYSE:BG) Dividend Will Be Increased To $0.6625
Bunge Limited (NYSE:BG) will increase its dividend from last year's comparable payment on the 1st of September to $0.6625. This takes the annual payment to 3.0% of the current stock price, which is about average for the industry.
Check out our latest analysis for Bunge
Bunge's Dividend Is Well Covered By Earnings
Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, Bunge was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
The next year is set to see EPS grow by 21.1%. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.
Bunge Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.08 in 2013 to the most recent total annual payment of $2.65. This implies that the company grew its distributions at a yearly rate of about 9.4% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Bunge has been growing its earnings per share at 93% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
Our Thoughts On Bunge's Dividend
Overall, we always like to see the dividend being raised, but we don't think Bunge will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Bunge (1 is a bit unpleasant!) that you should be aware of before investing. Is Bunge not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
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