PIERER Mobility (VIE:PKTM) Is Paying Out Less In Dividends Than Last Year

PIERER Mobility AG's (VIE:PKTM) dividend is being reduced from last year's payment covering the same period to €0.50 on the 29th of April. This payment takes the dividend yield to 1.2%, which only provides a modest boost to overall returns.

View our latest analysis for PIERER Mobility

PIERER Mobility's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, PIERER Mobility's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

If the trend of the last few years continues, EPS will grow by 5.4% over the next 12 months. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

PIERER Mobility's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 8 years was €0.30 in 2016, and the most recent fiscal year payment was €0.50. This implies that the company grew its distributions at a yearly rate of about 6.6% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. PIERER Mobility might have put its house in order since then, but we remain cautious.

We Could See PIERER Mobility's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. PIERER Mobility has impressed us by growing EPS at 5.4% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

In Summary

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. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for PIERER Mobility (of which 2 don't sit too well with us!) 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.

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