mobilezone holding ag (VTX:MOZN) Is Increasing Its Dividend To CHF0.84

mobilezone holding ag (VTX:MOZN) has announced that it will be increasing its dividend on the 19th of April to CHF0.84. This will take the annual payment from 5.1% to 5.1% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for mobilezone holding ag

mobilezone holding ag's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last payment made up 74% of earnings, but cash flows were much higher. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

Looking forward, earnings per share is forecast to rise by 17.6% over the next year. If the dividend continues on this path, the payout ratio could be 63% by next year, which we think can be pretty sustainable going forward.

mobilezone holding ag Has A Solid Track Record

The company has an extended history of paying stable dividends. The first annual payment during the last 10 years was CHF0.60 in 2012, and the most recent fiscal year payment was CHF0.84. This means that it has been growing its distributions at 3.4% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

mobilezone holding ag May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, mobilezone holding ag's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Slow growth and a high payout ratio could mean that mobilezone holding ag has maxed out the amount that it has been able to pay to shareholders. When the rate of return on reinvestment opportunities falls below a certain minimum level, companies often elect to pay a larger dividend instead. This is why many mature companies often have larger dividend yields.

mobilezone holding ag Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that mobilezone holding ag is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for mobilezone holding ag that investors need to be conscious of moving forward. Is mobilezone holding ag 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.