Greenbrier Companies to Increase Dividend Despite Cash Flow Challenges
Greenbrier’s Dividend Increase Signals Confidence Amidst Industry Competition
The Greenbrier Companies, Inc. (NYSE: GBX) recently announced its decision to raise the dividend to $0.30, surpassing the payout ratio of its competitors in the industry. This increased dividend brings the annual payment to 2.9% of the stock price, a substantial leap compared to last year’s payout. InvestingPro Data reveals that the company’s dividend yield as of 2023 stands at 2.93%, with a remarkable dividend growth rate of 11.11% in the past twelve months.
Potential for Sustainable Dividend Payouts with Greenbrier’s Expected Growth
Greenbrier’s earnings per share (EPS) are predicted to grow by 35.9% in the upcoming year. This growth, if realized, could lead to a sustainable payout ratio of 49%. Analysts anticipate sales growth in the current year, which may further bolster the company’s financial position, supporting the increased dividend payout. InvestingPro Tips suggests that Greenbrier’s net income is expected to grow this year, despite its significant debt burden and cash flow challenges.
Concerns Surrounding Greenbrier’s Dividend Sustainability
Despite Greenbrier’s consistent dividend payouts thus far, questions arise regarding the sustainability of its dividends throughout a full economic cycle. The company’s brief dividend payment history of only nine years, with an annual growth rate of 8.0%, adds to these concerns. Additionally, Greenbrier has experienced declining earnings over the past five years, with an annual decrease of 17% in EPS. However, recent data from InvestingPro suggests that the company’s EPS for the last twelve months stands at 1.79 USD, and four analysts have revised their earnings projections upwards for the upcoming period.
Investor Skepticism Surrounding Greenbrier’s Income Stock Potential
Investors are questioning whether Greenbrier is a suitable income stock, despite the forthcoming dividend increase and predicted EPS growth. With a current market cap of 1270M USD and a relatively high P/E ratio of 22.91 compared to near-term earnings growth, concerns are mounting. Additionally, the company’s volatile stock price movements, as highlighted by InvestingPro Tips, further contribute to investor skepticism.
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