Lavena AD (BUL:LAV) Is Increasing Its Dividend To BGN0.08

Lavena AD (BUL:LAV) has announced that it will be increasing its periodic dividend on the 1st of January to BGN0.08, which will be 167% higher than last year's comparable payment amount of BGN0.03. Despite this raise, the dividend yield of 1.2% is only a modest boost to shareholder returns.

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Lavena AD's Projected Earnings Seem Likely To Cover Future Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Lavena AD'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.

Looking forward, earnings per share could rise by 5.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Lavena AD

Lavena AD's Dividend Has Lacked Consistency

Lavena AD has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The last annual payment of BGN0.03 was flat on the annual payment from6 years ago. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

We Could See Lavena AD's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Lavena AD has seen EPS rising for the last five years, at 5.7% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Lavena AD's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Lavena AD you should be aware of, and 1 of them doesn't sit too well with us. Is Lavena AD not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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