Should Investors Consider Bird Construction, Amid a Falling Dividend Yield?


A dividend yield is a difficult thing to base an investment decision on; after all, a rising yield corresponds with a falling share price – a reality which causes most momentum investors to steer clear, and many value investors to get burned at the stake.

A declining dividend yield, however, typically coincides with an increasing share price, a fact which may worry many value investors who believe they may have “missed the train,” so to speak, with the value window which existed for a brief blip in time.

Bird Construction Inc. (TSX:BDT) is a Canadian, you guessed it, construction company focusing on the industrial, commercial, and institutional sectors of the construction market.

The projects the company holds are typically high-volume, high-dollar amount contracts awarded by large Canadian institutions or companies, leading the company to generally be very highly-tethered to the Canadian economy as a whole.

In recent years, as the Alberta economy sank into decline (a region which has traditionally accounted for a significant percentage of the company’s portfolio of work), Bird has seen its contract backlog shrink accordingly, leading many analysts and investors to look elsewhere, amid a range of other opportunities in industries which appeared ready to provide growth.

Recently, as signs of a strengthening Canadian economy have begun to show through the dense fog that is the low commodity price environment, Bird has appeared as an incredible value play, once holding a yield above 5%.

With a yield now less than 4%, I still suggest investors take a look at this company for the long-haul. After all, a 4% return while investors wait for capital appreciation isn’t a bad thing at all.

Invest wisely, my friends.