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

Telenet Group Holding NV (EBR:TNET) will pay a dividend of €0.96 on the 4th of May. The dividend yield will be 6.5% based on this payment which is still above the industry average.

View our latest analysis for Telenet Group Holding

Telenet Group Holding's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last payment made up 76% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to fall by 10.6% 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.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2012, the first annual payment was €4.25, compared to the most recent full-year payment of €2.75. This works out to be a decline of approximately 4.3% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Telenet Group Holding's Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Telenet Group Holding has impressed us by growing EPS at 59% per year over the past five years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Telenet Group Holding hasn't been doing.

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. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We don't think Telenet Group Holding is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Telenet Group Holding has 4 warning signs (and 2 which are a bit concerning) we think 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.