Vereinigte Filzfabriken (BST:VFF) Is Due To Pay A Dividend Of €15.82

Vereinigte Filzfabriken AG (BST:VFF) will pay a dividend of €15.82 on the 4th of July. Based on this payment, the dividend yield on the company's stock will be 3.0%, which is an attractive boost to shareholder returns.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Vereinigte Filzfabriken's Projections Indicate Future Payments May Be Unsustainable

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, the company's dividend was much higher than its earnings. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

Over the next year, EPS could expand by 4.8% if the company continues along the path it has been on recently. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 9,095,522% over the next year.

Check out our latest analysis for Vereinigte Filzfabriken

Vereinigte Filzfabriken Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of €18.61 in 2021 to the most recent total annual payment of €15.82. The dividend has shrunk at around 4.0% a year during that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Vereinigte Filzfabriken May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, Vereinigte Filzfabriken has only grown its earnings per share at 4.8% per annum over the past five years. With anaemic earnings growth, it's not confidence inspiring to see Vereinigte Filzfabriken paying out more than double what it is earning. Meaning that on balance, the dividend is more likely to fall in the future than to grow.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Vereinigte Filzfabriken's payments, as there could be some issues with sustaining them into the future. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 4 warning signs for Vereinigte Filzfabriken (of which 1 shouldn't be ignored!) you should know about. Is Vereinigte Filzfabriken not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.