Landis+Gyr Group's (VTX:LAND) Dividend Will Be Reduced To $1.15

Landis+Gyr Group AG (VTX:LAND) has announced that on 1st of July, it will be paying a dividend of$1.15, which a reduction from last year's comparable dividend. However, the dividend yield of 1.9% still remains in a typical range for the industry.

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Landis+Gyr Group's Long-term Dividend Outlook appears Promising

Unless the payments are sustainable, the dividend yield doesn't mean too much. Even while not generating a profit, Landis+Gyr Group is paying out most of its free cash flows as a dividend. Paying a dividend while unprofitable is generally considered an aggressive policy, and with limited funds retained for reinvestment, growth may be slow.

According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 8.2%, so there isn't too much pressure on the dividend.

View our latest analysis for Landis+Gyr Group

Landis+Gyr Group's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. Since 2018, the dividend has gone from $2.25 total annually to $1.39. This works out to be a decline of approximately 6.7% per year over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Company Could Face Some Challenges Growing The Dividend

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Landis+Gyr Group has seen EPS rising for the last five years, at 30% per annum. While the company is not yet turning a profit, it is growing at a good rate. If this trajectory continues and the company can turn a profit soon, it could bode well for the dividend going forward.

Landis+Gyr Group's Dividend Doesn't Look Sustainable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. Overall, we don't think this company has the makings of a good income 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. As an example, we've identified 1 warning sign for Landis+Gyr Group that you should be aware of before investing. Is Landis+Gyr Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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