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board of directors Brookfield Business Corporation (NYSE:BBUC) announced that it will pay a dividend on March 28, with investors receiving $0.0625 per share. Including this payment, the stock’s dividend yield is 0.8%, a slight increase in shareholder returns.
Dividend yields are important for income investors, but it’s also important to take into account large stock price fluctuations, as dividend yields generally exceed the return on dividends. Investors will be pleased that Brookfield Business’s stock price has risen 39% in the past three months. This is good for shareholders, and also explains the lower dividend yield.
Check out our latest analysis for Brookfield Business.
Distribution of Brookfield business may be difficult to maintain
Even a low dividend yield can be attractive if it is predictable over the long term. Brookfield Business pays a dividend even though it doesn’t make a profit. As a result, the company has been unable to generate free cash flow, raising concerns about the sustainability of its dividend.
If nothing changes, EPS this year could drop as dramatically as it has in recent days. This could mean management has to make difficult choices about whether to cut the dividend or put further pressure on the balance sheet.
Brookfield Business’s dividends are inconsistent.
Even in its short history, there have been dividend cuts. Starting in 2022, the annual payment was $0.25 at the time, and the recent annual payment was $0.184. Dividend payments declined significantly, falling by 26% over the period. Dividend declines aren’t usually something we look at, as it could indicate that the company is facing some challenges.
Potential for dividend growth is unstable
With dividends trending in the wrong direction, we would definitely like to see a different trend in earnings per share. Brookfield Business’s EPS decreased by 461% in the last twelve months. Such a large decline could indicate major challenges to the business, and could certainly result in lower dividend payments. However, keep in mind that one year is too short a time to draw any strong conclusions about a company’s future prospects.
Brookfield Business’s dividend doesn’t look very good.
Overall, some may be pleased that the dividend wasn’t cut, but we think this could allow the Brookfield business to make more stable payments in the future. The company’s earnings aren’t high enough to pay out such a large dividend, nor is it backed by strong growth or stability. Considering all these factors, you cannot rely on this dividend if you want to live off your income.
Market movements prove how highly valued a consistent dividend policy is compared to a more unpredictable dividend policy. However, there are other things investors should consider when analyzing stock performance. For example, we chose 1 warning sign for Brookfield Business Investors should consider this. Is Brookfield Business the opportunity you’ve been looking for? Why not check it out? Selection of high dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
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