Stemmer Imaging AG (ETR:S9I) will increase its dividend from last year's comparable payment on the 17th of May to €3.00. This makes the dividend yield 2.4%, which is above the industry average.
View our latest analysis for Stemmer Imaging
Stemmer Imaging Is Paying Out More Than It Is Earning
If the payments aren't sustainable, a high yield for a few years won't matter that much. However, Stemmer Imaging's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Earnings per share is forecast to rise by 7.0% over the next year. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 111% over the next year.
Stemmer Imaging's Dividend Has Lacked Consistency
The track record isn't the longest, but we are already seeing a bit of instability in the payments. The dividend has gone from an annual total of €0.50 in 2019 to the most recent total annual payment of €1.00. This means that it has been growing its distributions at 19% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
The Dividend Looks Likely To Grow
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. It's encouraging to see that Stemmer Imaging has been growing its earnings per share at 37% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
We Really Like Stemmer Imaging's Dividend
Overall, a dividend increase is always good, and we think that Stemmer Imaging is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Stemmer Imaging that you should be aware of before investing. Is Stemmer Imaging not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
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