Logwin (ETR:TGHN) Has Announced That Its Dividend Will Be Reduced To €12.80

The board of Logwin AG (ETR:TGHN) has announced it will be reducing its dividend by 8.6% from last year's payment of €14.00 on the 28th of April, with shareholders receiving €12.80. The dividend yield of 6.1% is still a nice boost to shareholder returns, despite the cut.

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Logwin's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Logwin was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to fall by 16.3%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 88%, which is definitely on the higher side.

See our latest analysis for Logwin

Logwin Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of €2.50 in 2018 to the most recent total annual payment of €14.00. This implies that the company grew its distributions at a yearly rate of about 28% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

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 Logwin has grown earnings per share at 13% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Logwin's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Logwin has the makings of a solid income stock moving forward. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Logwin that investors should know about before committing capital to this stock. Is Logwin not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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