Campine's (EBR:CAMB) Dividend Is Being Reduced To €0.46

By
Simply Wall St
Published
May 28, 2021
ENXTBR:CAMB
Source: Shutterstock

Campine NV's (EBR:CAMB) dividend is being reduced to €0.46 on the 11th of June. This means that the dividend yield is 1.5%, which is a bit low when comparing to other companies in the industry.

View our latest analysis for Campine

Campine's Earnings Easily Cover the Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Campine is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS could expand by 23.9% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 26%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
ENXTBR:CAMB Historic Dividend May 29th 2021

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The first annual payment during the last 10 years was €1.50 in 2011, and the most recent fiscal year payment was €0.65. The dividend has shrunk at around 8.0% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Campine has impressed us by growing EPS at 24% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

In Summary

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Campine has been making. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 3 warning signs for Campine that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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