Accelleron Industries (VTX:ACLN) Is Increasing Its Dividend To $1.20

Accelleron Industries AG's (VTX:ACLN) dividend will be increasing from last year's payment of the same period to $1.20 on 28th of May. This will take the dividend yield to an attractive 3.4%, providing a nice boost to shareholder returns.

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Accelleron Industries' Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before this announcement, Accelleron Industries was paying out 76% of earnings, but a comparatively small 74% of free cash flows. This leaves plenty of cash for reinvestment into the business.

The next year is set to see EPS grow by 39.6%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 47% which brings it into quite a comfortable range.

See our latest analysis for Accelleron Industries

Accelleron Industries Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2023, the annual payment back then was $0.793, compared to the most recent full-year payment of $1.41. This works out to be a compound annual growth rate (CAGR) of approximately 33% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Accelleron Industries Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Accelleron Industries has grown earnings per share at 7.1% per year over the past three years. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. 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 would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Accelleron Industries that investors need to be conscious of moving forward. Is Accelleron Industries 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.