Logicom's (CSE:LOG) Shareholders Will Receive A Bigger Dividend Than Last Year

Logicom Public Limited's (CSE:LOG) periodic dividend will be increasing on the 18th of July to €0.10, with investors receiving 11% more than last year's €0.09. This makes the dividend yield 2.5%, which is above the industry average.

We've discovered 1 warning sign about Logicom. View them for free.

Logicom's Future Dividend Projections Appear Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Logicom's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Unless the company can turn things around, EPS could fall by 1.7% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 15%, which we are pretty comfortable with and we think is feasible on an earnings basis.

See our latest analysis for Logicom

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of €0.04 in 2015 to the most recent total annual payment of €0.09. This means that it has been growing its distributions at 8.4% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. However, Logicom's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Logicom will make a great income stock. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Logicom that investors should know about before committing capital to this stock. Is Logicom not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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