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AirBoss of America Corp.'s (TSE:BOS) investors are due to receive a payment of $0.10 per share on 16th of October. This makes the dividend yield 7.9%, which will augment investor returns quite nicely.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. AirBoss of America's stock price has reduced by 31% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.
Check out our latest analysis for AirBoss of America
AirBoss of America's Earnings Easily Cover The Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. AirBoss of America is unprofitable despite paying a dividend, and it is paying out 134% of its free cash flow. This makes us feel that the dividend will be hard to maintain.
According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 1.8%, so there isn't too much pressure on the dividend.
AirBoss of America Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was $0.194, compared to the most recent full-year payment of $0.293. This works out to be a compound annual growth rate (CAGR) of approximately 4.2% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
The Dividend Has Limited Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Over the past five years, it looks as though AirBoss of America's EPS has declined at around 18% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
AirBoss of America's Dividend Doesn't Look Sustainable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. Overall, we don't think this company has the makings of a good income stock.