The Greenbrier (NYSE:GBX) Companies, Inc. (NYSE:GBX) announced that it will raise its dividend to $0.30 on November 29, exceeding the payout ratio of most industry competitors. This increase brings the annual payment to 2.9% of the stock price, a significant leap from last year's matching payout. As per InvestingPro Data, the company's dividend yield as of 2023 stands at 2.93%, with a dividend growth of 11.11% in the last twelve months.
Greenbrier's earnings per share (EPS) is expected to grow by 35.9% in the coming year, potentially leading to a sustainable payout ratio of 49%. According to InvestingPro Tips, the company's net income is expected to grow this year, and analysts anticipate sales growth in the current year. This could potentially bolster the company's financial position and support the increased dividend payout.
The company's brief dividend payment history, spanning only nine years with an annual growth rate of 8.0%, raises questions about the sustainability of its dividends throughout a full economic cycle. Yet, it's worth noting that Greenbrier has managed to maintain a consistent dividend payout thus far, despite its significant debt burden and quickly burning through cash, as per InvestingPro Tips.
Compounding these concerns is Greenbrier's declining earnings over the past five years. The company's EPS has seen an annual decrease of 17%, which could pose a threat to future dividends if this downward trend continues. However, the company's EPS for the last twelve months stands at 1.79 USD, according to InvestingPro Data, and four analysts have revised their earnings upwards for the upcoming period, as per InvestingPro Tips.
These factors together have led investors to question Greenbrier's suitability as an income stock, despite the forthcoming dividend increase and predicted EPS growth. The company's current market cap is 1270M USD, and it is trading at a P/E ratio of 22.91, which is relatively high compared to near-term earnings growth. This, along with the company's volatile stock price movements, as per InvestingPro Tips, may add to investor concerns.
For more in-depth analysis and tips about Greenbrier and other companies, consider exploring InvestingPro, which offers 16 additional tips and detailed real-time metrics for informed investment decisions.
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