Interroll Holding AG (VTX:INRN) will increase its dividend on the 19th of May to CHF31.00. Despite this raise, the dividend yield of 1.1% is only a modest boost to shareholder returns.
View our latest analysis for Interroll Holding
Interroll Holding's Earnings Easily Cover the Distributions
Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Interroll Holding was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
The next year is set to see EPS grow by 5.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.
Interroll Holding Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from CHF7.00 in 2012 to the most recent annual payment of CHF31.00. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
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. Interroll Holding has impressed us by growing EPS at 18% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Our Thoughts On Interroll Holding's Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.
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. To that end, Interroll Holding has 2 warning signs (and 1 which is a bit concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
About SWX:INRN
Interroll Holding
Provides material handling solutions in Germany, rest of Europe, the Middle East, Africa, the United States, rest of the Americas, China, and rest of the Asia- Pacific.
Flawless balance sheet, good value and pays a dividend.
