Accelleron Industries' (VTX:ACLN) Dividend Will Be Increased To $0.85

Accelleron Industries AG (VTX:ACLN) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of May to $0.85. The payment will take the dividend yield to 2.4%, which is in line with the average for the industry.

View our latest analysis for Accelleron Industries

Accelleron Industries' Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, Accelleron Industries was paying out 94% of earnings and more than 75% of free cash flows. This is usually an indication that the focus of the company is returning cash to shareholders rather than reinvesting it for growth.

The next year is set to see EPS grow by 88.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 42%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

Accelleron Industries Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. EPS has fallen 18% over the last 12 months. A one off decline isn't a massive problem, but if it continues it could start to cause larger issues. Any one year of performance can be misleading for a variety of reasons, so we wouldn't like to form any strong conclusions based on these numbers alone.

Accelleron Industries' Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Accelleron Industries will make a great income stock. The track record isn't great, and the payments are a bit high to be considered sustainable. We don't think Accelleron Industries is a great stock to add to your portfolio if income is your focus.

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. As an example, we've identified 3 warning signs for Accelleron Industries that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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