WEG (BVMF:WEGE3) Is Paying Out A Dividend Of R$0.0491

WEG S.A.'s (BVMF:WEGE3) investors are due to receive a payment of R$0.0491 per share on 14th of August. Based on this payment, the dividend yield will be 1.6%, which is fairly typical for the industry.

See our latest analysis for WEG

WEG's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. The last dividend was quite easily covered by WEG's earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 27.4%. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

WEG Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was R$0.11, compared to the most recent full-year payment of R$0.65. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that WEG has been growing its earnings per share at 34% a year over the past five years. WEG is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like WEG's Dividend

Overall, we like to see the dividend staying consistent, and we think WEG might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 11 analysts we track are forecasting for WEG for free with public analyst estimates for the company. Is WEG 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.