AS Latvijas Juras medicinas centrs' (MUN:UOM) Dividend Will Be Increased To €0.20

AS Latvijas Juras medicinas centrs' (MUN:UOM) dividend will be increasing to €0.20 on 28th of June. Although the dividend is now higher, the yield is only 1.5%, which is below the industry average.

See our latest analysis for AS Latvijas Juras medicinas centrs

AS Latvijas Juras medicinas centrs' Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, AS Latvijas Juras medicinas centrs was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 38.4% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 7.9% by next year, which is in a pretty sustainable range.

AS Latvijas Juras medicinas centrs' Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from €0.40 in 2017 to the most recent annual payment of €0.20. This works out to a decline of approximately 50% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see AS Latvijas Juras medicinas centrs has been growing its earnings per share at 38% a 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 AS Latvijas Juras medicinas centrs' Dividend

In summary, while it's always good to see the dividend being raised, we don't think AS Latvijas Juras medicinas centrs' 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. 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 3 warning signs for AS Latvijas Juras medicinas centrs (of which 1 is concerning!) you should know about. Is AS Latvijas Juras medicinas centrs not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.