Semperit Holding (VIE:SEM) Is Paying Out A Dividend Of €0.50

Semperit Aktiengesellschaft Holding's (VIE:SEM) investors are due to receive a payment of €0.50 per share on 30th of April. The dividend yield will be 3.3% based on this payment which is still above the industry average.

Semperit Holding's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Semperit Holding's dividend made up quite a large proportion of earnings but only 34% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Analysts expect a massive rise in earnings per share in the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 29% which is fairly sustainable.

View our latest analysis for Semperit Holding

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of €0.90 in 2015 to the most recent total annual payment of €0.50. Doing the maths, this is a decline of about 5.7% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Has Limited Growth Potential

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Semperit Holding's EPS has fallen by approximately 20% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Our Thoughts On Semperit Holding's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Semperit Holding's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

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. Taking the debate a bit further, we've identified 2 warning signs for Semperit Holding that investors need to be conscious of moving forward. 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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