Stock Analysis

Telenet Group Holding (EBR:TNET) Has Affirmed Its Dividend Of €0.96

ENXTBR:TNET
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Telenet Group Holding NV (EBR:TNET) has announced that it will pay a dividend of €0.96 per share on the 4th of May. This means the annual payment is 6.4% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Telenet Group Holding

Telenet Group Holding's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Telenet Group Holding's dividend made up quite a large proportion of earnings but only 55% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, earnings per share is forecast to fall by 11.1% over the next year. Assuming the dividend continues along recent trends, the payout ratio in 12 months could be 60%, which is more comfortable than the current payout ratio.

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ENXTBR:TNET Historic Dividend March 19th 2022

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. The dividend has gone from €4.50 in 2012 to the most recent annual payment of €2.75. The dividend has shrunk at around 4.8% a year during that period. 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.

Telenet Group Holding's Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Telenet Group Holding has seen EPS rising for the last five years, at 58% per annum. However, Telenet Group Holding isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

Our Thoughts On Telenet Group Holding's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Telenet Group Holding's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for Telenet Group Holding (of which 3 are potentially serious!) you should know about. Is Telenet Group Holding 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.