Eckert & Ziegler Strahlen- und Medizintechnik's (ETR:EUZ) Dividend Will Be Increased To €0.50

Eckert & Ziegler Strahlen- und Medizintechnik AG (ETR:EUZ) has announced that it will be increasing its dividend on the 6th of June to €0.50. This makes the dividend yield about the same as the industry average at 1.0%.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Eckert & Ziegler Strahlen- und Medizintechnik's stock price has reduced by 36% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

View our latest analysis for Eckert & Ziegler Strahlen- und Medizintechnik

Eckert & Ziegler Strahlen- und Medizintechnik's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Eckert & Ziegler Strahlen- und Medizintechnik's dividend was only 30% of earnings, however it was paying out 208% of free cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Looking forward, earnings per share is forecast to fall by 10.7% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 41%, which is comfortable for the company to continue in the future.

Eckert & Ziegler Strahlen- und Medizintechnik Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The first annual payment during the last 10 years was €0.15 in 2012, and the most recent fiscal year payment was €0.50. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Eckert & Ziegler Strahlen- und Medizintechnik has grown earnings per share at 28% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On Eckert & Ziegler Strahlen- und Medizintechnik's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Eckert & Ziegler Strahlen- und Medizintechnik's payments are rock solid. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Eckert & Ziegler Strahlen- und Medizintechnik (1 shouldn't be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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