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

Pfeiffer Vacuum Technology AG (ETR:PFV) will increase its dividend on the 24th of May to €4.08. Based on the announced payment, the dividend yield for the company will be 2.4%, which is fairly typical for the industry.

Check out our latest analysis for Pfeiffer Vacuum Technology

Pfeiffer Vacuum Technology's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, Pfeiffer Vacuum Technology's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 32.9%. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The first annual payment during the last 10 years was €2.90 in 2012, and the most recent fiscal year payment was €4.08. This implies that the company grew its distributions at a yearly rate of about 3.5% over that duration. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

We Could See Pfeiffer Vacuum Technology's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. 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.

We Really Like Pfeiffer Vacuum Technology's Dividend

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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Pfeiffer Vacuum Technology that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.