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Foresight Environmental Infrastructure Limited (LON:FGEN) will pay a dividend of £0.0195 on the 27th of December. This makes the dividend yield 10.0%, which is above the industry average.
Check out our latest analysis for Foresight Environmental Infrastructure
Foresight Environmental Infrastructure Might Find It Hard To Continue The Dividend
If the payments aren't sustainable, a high yield for a few years won't matter that much. Despite not generating a profit, Foresight Environmental Infrastructure is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.
Looking forward, earnings per share could rise by 12.5% over the next year if the trend from the last few years continues. This is the right direction to be moving, but it is probably not enough to achieve profitability. Unfortunately, for the dividend to continue at current levels the company definitely needs to get there sooner rather than later.
Foresight Environmental Infrastructure Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of £0.06 in 2014 to the most recent total annual payment of £0.0757. This implies that the company grew its distributions at a yearly rate of about 2.4% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Company Could Face Some Challenges Growing The Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Foresight Environmental Infrastructure has been growing its earnings per share at 13% a year over the past five years. It's not an ideal situation that the company isn't turning a profit but the growth recently is a positive sign. All is not lost, but the future of the dividend definitely rests upon the company's ability to become profitable soon.
Foresight Environmental Infrastructure's Dividend Doesn't Look Sustainable
In summary, while it's always good to see the dividend being raised, we don't think Foresight Environmental Infrastructure's payments are rock solid. 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. This company is not in the top tier of income providing stocks.