EnviTec Biogas (ETR:ETG) Has Announced That It Will Be Increasing Its Dividend To €2.00

EnviTec Biogas AG (ETR:ETG) has announced that it will be increasing its periodic dividend on the 6th of July to €2.00, which will be 100% higher than last year's comparable payment amount of €1.00. This takes the dividend yield to 2.2%, which shareholders will be pleased with.

Check out our latest analysis for EnviTec Biogas

EnviTec Biogas' Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, EnviTec Biogas' 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.

EPS is set to grow by 53.8% over the next year if recent trends continue. If recent patterns in the dividend continue, the payout ratio in 12 months could be 78% which is a bit high but can definitely be sustainable.

EnviTec Biogas' Dividend Has Lacked Consistency

It's comforting to see that EnviTec Biogas has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The annual payment during the last 8 years was €0.35 in 2015, and the most recent fiscal year payment was €1.00. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. EnviTec Biogas has impressed us by growing EPS at 54% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like EnviTec Biogas' Dividend

Overall, a dividend increase is always good, and we think that EnviTec Biogas 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for EnviTec Biogas that investors should take into consideration. Is EnviTec Biogas not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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