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It looks like Brookfield Infrastructure Corporation (NYSE:BIPC) is about to go ex-dividend in the next 3 days. You can purchase shares before the 25th of February in order to receive the dividend, which the company will pay on the 31st of March.
Brookfield Infrastructure's upcoming dividend is US$0.51 a share, following on from the last 12 months, when the company distributed a total of US$2.04 per share to shareholders. Looking at the last 12 months of distributions, Brookfield Infrastructure has a trailing yield of approximately 3.3% on its current stock price of $61.66. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Brookfield Infrastructure has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Brookfield Infrastructure reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Brookfield Infrastructure didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. The good news is it paid out just 11% of its free cash flow in the last year.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend.
Given that Brookfield Infrastructure has only been paying a dividend for a year, there's not much of a past history to draw insight from.
Remember, you can always get a snapshot of Brookfield Infrastructure's financial health, by checking our visualisation of its financial health, here.
To Sum It Up
Has Brookfield Infrastructure got what it takes to maintain its dividend payments? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.
If you want to look further into Brookfield Infrastructure, it's worth knowing the risks this business faces. Our analysis shows 5 warning signs for Brookfield Infrastructure that we strongly recommend you have a look at before investing in the company.
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. 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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