PIERER Mobility (VIE:PMAG) Is Paying Out A Larger Dividend Than Last Year

PIERER Mobility AG (VIE:PMAG) has announced that it will be increasing its dividend on the 9th of May to €1.00. Although the dividend is now higher, the yield is only 1.2%, which is below the industry average.

Check out 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. Before making this announcement, PIERER Mobility was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 8.0% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 43% by next year, which is in a pretty sustainable range.

PIERER Mobility's Dividend Has Lacked Consistency

PIERER Mobility has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The first annual payment during the last 6 years was €0.30 in 2016, and the most recent fiscal year payment was €1.00. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

We Could See PIERER Mobility's Dividend Growing

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 PIERER Mobility has been growing its earnings per share at 8.0% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for PIERER Mobility's prospects of growing its dividend payments in the future.

We'd also point out that PIERER Mobility has issued stock equal to 51% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

PIERER Mobility Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that PIERER Mobility 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for PIERER Mobility (1 is significant!) that you should be aware of before investing. 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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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.