Administradora Americana de Inversiones (SNSE:AAISA) Is Paying Out A Larger Dividend Than Last Year

Administradora Americana de Inversiones S.A. (SNSE:AAISA) will increase its dividend on the 16th of May to CLP11.50, which is 15% higher than last year's payment from the same period of CLP10.00. This takes the annual payment to 4.4% of the current stock price, which unfortunately is below what the industry is paying.

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Administradora Americana de Inversiones' Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, Administradora Americana de Inversiones' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, EPS could fall by 4.4% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 37%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Check out our latest analysis for Administradora Americana de Inversiones

Administradora Americana de Inversiones Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2022, the dividend has gone from CLP3.50 total annually to CLP10.00. This works out to be a compound annual growth rate (CAGR) of approximately 42% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Administradora Americana de Inversiones May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Administradora Americana de Inversiones has seen earnings per share falling at 4.4% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Administradora Americana de Inversiones' payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

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. See if management have their own wealth at stake, by checking insider shareholdings in Administradora Americana de Inversiones stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.