Kinepolis Group's (EBR:KIN) Upcoming Dividend Will Be Larger Than Last Year's

Kinepolis Group NV (EBR:KIN) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of May to €0.385. Based on this payment, the dividend yield for the company will be 1.4%, which is fairly typical for the industry.

Check out our latest analysis for Kinepolis Group

Kinepolis Group's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Kinepolis Group was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 66.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 11%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the dividend has gone from €0.638 total annually to €0.55. The dividend has shrunk at around 1.5% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Kinepolis Group May Find It Hard To Grow The Dividend

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. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Kinepolis Group that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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