The board of Korado-Bulgaria AD (BUL:KBG) has announced that the dividend on 9th of October will be reduced by 50% from last year’s BGN0.10 to BGN0.05. However, the dividend yield of 4.9% is still a decent boost to shareholder returns.
Korado-Bulgaria AD’s Payment Could Potentially Have Solid Earnings Coverage
If the payments aren’t sustainable, a high yield for a few years won’t matter that much. Before making this announcement, Korado-Bulgaria AD’s dividend was higher than its profits, but the free cash flows quite comfortably covered it. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.
EPS is set to fall by 15.9% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could be 58%, which we consider to be quite comfortable, even though the current levels are slightly more elevated.
BUL:KBG Historic Dividend September 13th 2025
See our latest analysis for Korado-Bulgaria AD
Dividend Volatility
The company’s dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of BGN0.08 in 2015 to the most recent total annual payment of BGN0.20. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we’re not certain this dividend stock would be ideal for someone intending to live on the income.
Dividend Growth Potential Is Shaky
With a relatively unstable dividend, it’s even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Korado-Bulgaria AD’s EPS has fallen by approximately 16% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.
Korado-Bulgaria AD’s Dividend Doesn’t Look Sustainable
Overall, it’s not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn’t been great. Overall, we don’t think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Case in point: We’ve spotted 5 warning signs for Korado-Bulgaria AD (of which 2 shouldn’t be ignored!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
Discover if Korado-Bulgaria AD might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.