Amadeus FiRe's (ETR:AAD) Upcoming Dividend Will Be Larger Than Last Year's

April 28, 2022
  •  Updated
May 12, 2022
XTRA:AAD
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Amadeus FiRe AG (ETR:AAD) has announced that it will be increasing its dividend on the 24th of May to €3.04. This takes the dividend yield from 2.4% to 2.4%, which shareholders will be pleased with.

View our latest analysis for Amadeus FiRe

Amadeus FiRe's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Amadeus FiRe's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 16.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 37% by next year, which is in a pretty sustainable range.

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XTRA:AAD Historic Dividend April 28th 2022

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. Since 2012, the dividend has gone from €2.84 to €3.04. Its dividends have grown at less than 1% per annum over this time frame. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

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. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Amadeus FiRe Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Amadeus FiRe is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Amadeus FiRe that you should be aware of before investing. 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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