Österreichische Post (VIE:POST) Has Announced That It Will Be Increasing Its Dividend To €1.78

Österreichische Post AG's (VIE:POST) dividend will be increasing from last year's payment of the same period to €1.78 on 2nd of May. This will take the annual payment to 5.5% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Österreichische Post

Österreichische Post Doesn't Earn Enough To Cover Its Payments

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Österreichische Post was paying out quite a large proportion of both earnings and cash flow, with the dividend being 134% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

Over the next year, EPS is forecast to fall by 5.8%. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 96%, which is definitely a bit high to be sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from €1.90 total annually to €1.78. The dividend has shrunk at a rate of less than 1% a year over this period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Österreichische Post May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Österreichische Post's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

Österreichische Post's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The payments are bit high to be considered sustainable, and the track record isn't the best. We don't think Österreichische Post is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for Österreichische Post that you should be aware of before investing. Is Österreichische Post not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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