Fluxys Belgium (EBR:FLUX) Has Announced That It Will Be Increasing Its Dividend To €0.97

Fluxys Belgium SA's (EBR:FLUX) dividend will be increasing to €0.97 on 18th of May. This takes the annual payment to 3.3% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for Fluxys Belgium

Fluxys Belgium's Earnings Easily Cover the Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Fluxys Belgium's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

Earnings per share could rise by 9.3% over the next year if things go the same way as they have for the last few years. If the dividend continues growing along recent trends, we estimate the payout ratio could reach 84%, which is on the higher side, but certainly still feasible.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The first annual payment during the last 10 years was €2.88 in 2012, and the most recent fiscal year payment was €1.38. The dividend has shrunk at around 7.1% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Achieve

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Fluxys Belgium has impressed us by growing EPS at 9.3% per year over the past five years. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Our Thoughts On Fluxys Belgium's Dividend

Overall, we always like to see the dividend being raised, but we don't think Fluxys Belgium will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Fluxys Belgium (1 is a bit unpleasant!) that you should be aware of before investing. Is Fluxys Belgium 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.