CEWE Stiftung KGaA (ETR:CWC) Is Increasing Its Dividend To €2.60

The board of CEWE Stiftung & Co. KGaA (ETR:CWC) has announced that it will be increasing its dividend by 6.1% on the 10th of June to €2.60, up from last year's comparable payment of €2.45. Despite this raise, the dividend yield of 2.4% is only a modest boost to shareholder returns.

See our latest analysis for CEWE Stiftung KGaA

CEWE Stiftung KGaA's Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, CEWE Stiftung KGaA's dividend was comfortably covered by both cash flow and earnings. 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 25.2%. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

CEWE Stiftung KGaA Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was €1.45, compared to the most recent full-year payment of €2.45. This implies that the company grew its distributions at a yearly rate of about 5.4% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that CEWE Stiftung KGaA has been growing its earnings per share at 13% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

CEWE Stiftung KGaA Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that CEWE Stiftung KGaA 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. 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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 CEWE Stiftung KGaA analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is CEWE Stiftung KGaA not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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