Readers hoping to buy Brookfield Infrastructure Corporation (NYSE:BIPC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves a full business day. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Brookfield Infrastructure's shares on or after the 31st of August will not receive the dividend, which will be paid on the 29th of September.
The company's next dividend payment will be US$0.455 per share. Last year, in total, the company distributed US$1.82 to shareholders. Looking at the last 12 months of distributions, Brookfield Infrastructure has a trailing yield of approximately 4.6% on its current stock price of US$39.58. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Brookfield Infrastructure paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
View our latest analysis for Brookfield Infrastructure
Click here to see how much of its profit Brookfield Infrastructure paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Brookfield Infrastructure reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last six years, Brookfield Infrastructure has lifted its dividend by approximately 5.9% a year on average.
Get our latest analysis on Brookfield Infrastructure's balance sheet health here.
Final Takeaway
From a dividend perspective, should investors buy or avoid Brookfield Infrastructure? These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
So if you're still interested in Brookfield Infrastructure despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. In terms of investment risks, we've identified 2 warning signs with Brookfield Infrastructure and understanding them should be part of your investment process.
A common investing mistake is buying the first interesting stock you see. Here you can find a full 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.