Amadeus FiRe's (ETR:AAD) Shareholders Will Receive A Bigger Dividend Than Last Year

March 25, 2022
  •  Updated
April 28, 2022
XTRA:AAD
Source: Shutterstock

The board of Amadeus FiRe AG (ETR:AAD) has announced that it will be increasing its dividend on the 24th of May to €3.04. This will take the annual payment from 2.1% to 2.1% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Amadeus FiRe

Amadeus FiRe's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Amadeus FiRe's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 22.3% over the next year. If the dividend continues on this path, the payout ratio could be 38% by next year, which we think can be pretty sustainable going forward.

historic-dividend
XTRA:AAD Historic Dividend March 25th 2022

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from €1.67 in 2012 to the most recent annual payment of €3.04. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Amadeus FiRe has impressed us by growing EPS at 11% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Amadeus FiRe's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. All in all, this checks a lot of the boxes we look for when choosing an 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. For example, we've picked out 1 warning sign for Amadeus FiRe that investors should know about before committing capital to this stock. Is Amadeus FiRe not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.