Questor share tip: Balfour Beatty warning prompts dividend concerns Management said the rest of the business was performing in line with expectations. However, it is likely that consensus earnings forecasts for 2013 will be cut by about a fifth. Perhaps the next bit of key news for investors could be regarding the dividend. Some City analysts have mooted the possibility of a dividend cut this year. Liberum said yesterday it expected the full-year payment would be slashed to 10p from 14.1p. During Balfour's presentation to the City, management reaffirmed its commitment to a "progressive dividend policy" and made it clear that they were aware of the crucial role that dividends played. However, any decision on the payment will be made later this year based upon the outlook at that time. The decision on whether to maintain the payment or rebase it will be key to Balfour's share price performance for the rest of the year. Indeed, the shares appear to be pricing in a dividend cut already, as the prospective yield is now 6.4pc this year. Should the payout be cut to the 10p level mooted by Liberum, the prospective yield this year will be 4.6pc. This seems like a more sensible level. However, a cut is by no means certain. There is no doubt that the long-term prospects for global infrastructure spending look sound. Over the next five years the market is estimated to be worth about £11 trillion, with about 85pc of this spending coming from the transport, power and energy, and water sectors, where Balfour has expertise. Growth in these sectors continues to be stronger in emerging markets and resource-rich economies, with spending from non-OECD markets rising from about 35pc of the total today to 60pc in 2025. Balfour is trying to secure more work on complex and long-term infrastructure projects, which are more profitable. However, despite this upbeat longer-term outlook, Balfour's markets remain challenging and pressure on construction margins looks set to continue. The shares certainly look cheap at the current valuation, trading on a 2013 earnings multiple of 8 times, falling to 7.1 next year. However, if management decides it has no choice other than to cut the dividend, then they could get cheaper still. Many investors will be sitting on losses and they may wish to take these on the chin and put the cash into better prospects. However, the official rating is hold.