Nabaltec (ETR:NTG) Is Increasing Its Dividend To €0.29

Nabaltec AG (ETR:NTG) has announced that it will be increasing its periodic dividend on the 30th of June to €0.29, which will be 3.6% higher than last year's comparable payment amount of €0.28. Even though the dividend went up, the yield is still quite low at only 1.8%.

Our free stock report includes 1 warning sign investors should be aware of before investing in Nabaltec. Read for free now.

Nabaltec's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. But before making this announcement, Nabaltec's earnings quite easily covered the dividend. However, with more than 75% of free cash flow being paid out to shareholders, future growth could potentially be constrained.

Looking forward, earnings per share is forecast to rise by 24.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 16%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Nabaltec

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of €0.06 in 2015 to the most recent total annual payment of €0.28. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Nabaltec has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Nabaltec Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Nabaltec has grown earnings per share at 5.9% per year over the past five years. Nabaltec definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Nabaltec's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Nabaltec's payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Nabaltec has been making. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Nabaltec that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.