Pfeiffer Vacuum Technology (ETR:PFV) Will Pay A Larger Dividend Than Last Year At €4.08

The board of Pfeiffer Vacuum Technology AG (ETR:PFV) has announced that it will be increasing its dividend by 155% on the 24th of May to €4.08. This will take the annual payment from 0.9% to 2.3% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Pfeiffer Vacuum Technology

Pfeiffer Vacuum Technology's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Pfeiffer Vacuum Technology was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 32.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 45%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2012, the dividend has gone from €2.90 to €1.60. This works out to be a decline of approximately 5.8% 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.

Pfeiffer Vacuum Technology Could Grow Its Dividend

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Pfeiffer Vacuum Technology has impressed us by growing EPS at 8.4% per year over the past five years. Pfeiffer Vacuum Technology definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Pfeiffer Vacuum Technology Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Pfeiffer Vacuum Technology 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Pfeiffer Vacuum Technology that you should be aware of before investing. 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.