Kinepolis Group (EBR:KIN) Will Pay A Larger Dividend Than Last Year At €0.385

Kinepolis Group NV (EBR:KIN) will increase its dividend from last year's comparable payment on the 15th of May to €0.385. The payment will take the dividend yield to 1.3%, which is in line with the average for the industry.

See our latest analysis for Kinepolis Group

Kinepolis Group's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, prior to this announcement, Kinepolis Group's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 70.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 11% by next year, which is in a pretty sustainable range.

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 €0.638 total annually to €0.55. Doing the maths, this is a decline of about 1.5% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend's Growth Prospects Are Limited

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. However, Kinepolis Group has only grown its earnings per share at 3.6% per annum over the past five years. While EPS growth is quite low, Kinepolis Group has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Kinepolis Group's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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. For example, we've picked out 1 warning sign for Kinepolis Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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