EVN AG (VIE:EVN) announced that it will increase its dividend on February 11th to €0.52. This takes the annual payment to 2.0% of the current stock price, which is unfortunately less than what the industry is paying.
View our latest analysis for EVN
EVN earnings are well covered by earnings
Even a low dividend yield can be attractive if it continues for years on end. Prior to this announcement, EVN was easily earning enough to cover profits. This means that most of what a business earns is used to help it grow.
Looking ahead, earnings per share are expected to decline by 28.8% over the next year. Assuming dividend continues according to recent trends, we believe the payout could be 41%, which we are comfortable with and believe is possible on an dividend basis.
EVN has a proven track record
The company has been paying dividends for a long time, and it has been quite stable which gives us confidence that dividends can be paid out in the future. The first annual payment for the past 10 years was €0.41 in 2011, and the last payment for the fiscal year was €0.52. This means that the company has grown its dividend at an annual rate of about 2.4% over that period. Dividends have grown relatively slowly, which is not great, but some investors may appreciate the relative consistency of dividends.
Dividend likely to grow
Some investors will nibble a bit to buy some of the company’s stock based on the dividend date. We’re encouraged to see that EVN has grown earnings per share by 16% annually over the past five years. With an appropriate amount of growth and a low payout ratio, we believe this bodes well for EVN’s expectations of increasing its dividend payments in the future.
WE REALLY LOVE EVN EARNINGS
In short, it is always positive to see an increase in profits, and we are particularly pleased with its overall sustainability. The company generates a lot of cash, and the profits cover the distributions quite easily. We should point out that earnings are expected to decline over the next 12 months, which won’t be a problem if this doesn’t become a trend, but could cause some turmoil in the coming year. All of these factors into consideration, we believe have strong potential as a dividend stock.
Firms with a consistent dividend policy are more likely to enjoy more interest from investors than those with an inconsistent approach. Meanwhile, while dividend payments are important, they aren’t the only factors readers should know when evaluating a company. The companies that pay dividends tend to have the best dividend stocks in the long run. Find out what the three analysts we track expect for EVN Free With estimates from the company’s public analysts. If you are a dividend investor, you may also want to take a look at A curated list of high performance dividend stocks.
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