Alupar Investimento (BVMF:ALUP11) Is Paying Out A Larger Dividend Than Last Year

Alupar Investimento S.A. (BVMF:ALUP11) has announced that it will be increasing its dividend from last year's comparable payment on the 16th of June to R$0.87. Even though the dividend went up, the yield is still quite low at only 2.9%.

Alupar Investimento's Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Alupar Investimento was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 46.4% over the next 12 months. If recent patterns in the dividend continue, we could see the payout ratio reaching 86% in the next 12 months, which is on the higher end of the range we would say is sustainable.

Check out our latest analysis for Alupar Investimento

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from R$1.46 total annually to R$0.87. Doing the maths, this is a decline of about 5.0% per year. 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.

Alupar Investimento May Find It Hard To Grow The Dividend

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Earnings has been rising at 4.1% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Alupar Investimento has the option to increase the payout ratio to return more cash to shareholders.

In Summary

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. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Alupar Investimento that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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