Elecnor (BME:ENO) Has Announced That It Will Be Increasing Its Dividend To €0.292

Elecnor, S.A. (BME:ENO) has announced that it will be increasing its dividend from last year's comparable payment on the 31st of May to €0.292. This makes the dividend yield about the same as the industry average at 2.9%.

View our latest analysis for Elecnor

Elecnor's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, Elecnor was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 24.4% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

Elecnor Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was €0.26 in 2013, and the most recent fiscal year payment was €0.358. This implies that the company grew its distributions at a yearly rate of about 3.3% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Elecnor has grown earnings per share at 7.6% per year over the past five years. Elecnor definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Elecnor Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Elecnor is a strong income stock thanks to its track record and growing earnings. 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. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, Elecnor has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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