Bassett Furniture Industries' (NASDAQ:BSET) Dividend Will Be Increased To $0.16
Bassett Furniture Industries, Incorporated (NASDAQ:BSET) will increase its dividend from last year's comparable payment on the 26th of August to $0.16. This will take the dividend yield to an attractive 3.1%, providing a nice boost to shareholder returns.
View our latest analysis for Bassett Furniture Industries
Bassett Furniture Industries Is Paying Out More Than It Is Earning
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Bassett Furniture Industries 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.
EPS is set to fall by 36.6% over the next 12 months. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 151%, which is definitely a bit high to be sustainable going forward.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2012, the annual payment back then was $0.14, compared to the most recent full-year payment of $0.64. This means that it has been growing its distributions at 16% per annum over that time. 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.
Bassett Furniture Industries Could Grow Its Dividend
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Bassett Furniture Industries has been growing its earnings per share at 6.5% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Bassett Furniture Industries' prospects of growing its dividend payments in the future.
In Summary
Overall, we always like to see the dividend being raised, but we don't think Bassett Furniture Industries will make a great income stock. While Bassett Furniture Industries is earning enough to cover the payments, the cash flows are lacking. We don't think Bassett Furniture Industries is a great stock to add to your portfolio if income is your focus.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Bassett Furniture Industries (of which 2 are a bit concerning!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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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