EMS-CHEMIE HOLDING (VTX:EMSN) Is Increasing Its Dividend To CHF17.25

EMS-CHEMIE HOLDING AG (VTX:EMSN) has announced that it will be increasing its dividend from last year's comparable payment on the 14th of August to CHF17.25. This makes the dividend yield about the same as the industry average at 2.7%.

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EMS-CHEMIE HOLDING's Future Dividend Projections Appear Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. The last dividend made up a very large portion of earnings and also represented 90% of free cash flows. This indicates that the company is more focused on returning cash to shareholders than growing the business, but it is still in a reasonable range to continue with.

EPS is set to grow by 12.5% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 80% which is a bit high but can definitely be sustainable.

See our latest analysis for EMS-CHEMIE HOLDING

EMS-CHEMIE HOLDING Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was CHF12.00, compared to the most recent full-year payment of CHF17.25. This implies that the company grew its distributions at a yearly rate of about 3.7% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. It's not great to see that EMS-CHEMIE HOLDING's earnings per share has fallen at approximately 2.7% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On EMS-CHEMIE HOLDING's Dividend

In summary, while it's always good to see the dividend being raised, we don't think EMS-CHEMIE HOLDING's payments are rock solid. While EMS-CHEMIE HOLDING is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think EMS-CHEMIE HOLDING is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for EMS-CHEMIE HOLDING 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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