Bread Financial Holdings, Inc. (NYSE:BFH) announced plans for a $0.21 per share dividend payment on December 15th, yielding a standard 3.1%. This comes despite the company's recent 36% stock price decrease, which could potentially offset dividend gains. The current earnings of the company are reported to sufficiently cover this dividend, allowing for considerable reinvestment into its operations.
However, future projections indicate a significant 44.1% drop in the company's earnings per share in the coming year. This could lead to a higher but still sustainable payout ratio of 12%. The firm's inconsistent dividend history since 2016 raises further concerns. Over the past seven years, annual dividends have seen a sharp fall from $2.08 to $0.84, marking a 60% decrease.
This instability and downward trend are exacerbated by an annual 8.3% decrease in earnings per share over the past five years, casting further doubt on the potential for future dividend growth. The recent developments and historical performance of Bread Financial Holdings highlight the uncertainty surrounding its dividend prospects going forward.
InvestingPro Insights
According to InvestingPro's real-time data, Bread Financial Holdings, Inc. has an adjusted market cap of $2920M and a negative P/E ratio of -0.74. The company's revenue for the last twelve months as of Q2 2023 was $4138M, but it experienced a significant decline in revenue growth of -60.2% during the same period. The company's gross profit margin was also negative, standing at -66.36%.
InvestingPro Tips shed light on the company's financial health and future prospects. Despite the company not being profitable over the last twelve months, management has been aggressively buying back shares, indicating confidence in the company's future. Additionally, net income is expected to grow this year. However, it's important to note that the company is suffering from weak gross profit margins and declining revenue at an accelerating rate, which may impact its ability to maintain dividends in the future.
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