M1 Kliniken's (ETR:M12) Dividend Will Be €0.50

The board of M1 Kliniken AG (ETR:M12) has announced that it will pay a dividend on the 21st of July, with investors receiving €0.50 per share. This means that the annual payment will be 3.3% of the current stock price, which is in line with the average for the industry.

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M1 Kliniken's Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, M1 Kliniken's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 51.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 39% by next year, which is in a pretty sustainable range.

See our latest analysis for M1 Kliniken

M1 Kliniken's Dividend Has Lacked Consistency

It's comforting to see that M1 Kliniken has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from an annual total of €0.30 in 2016 to the most recent total annual payment of €0.50. This implies that the company grew its distributions at a yearly rate of about 5.8% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. M1 Kliniken has impressed us by growing EPS at 16% per year over the past five years. The company is paying out a lot of its cash as a dividend, but it looks okay based on the payout ratio.

We Really Like M1 Kliniken's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Taking the debate a bit further, we've identified 1 warning sign for M1 Kliniken that investors need to be conscious of moving forward. Is M1 Kliniken not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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