The board of Applus Services, S.A. (BME:APPS) has announced that it will pay a dividend on the 6th of July, with investors receiving €0.1296 per share. Based on this payment, the dividend yield will be 1.8%, which is fairly typical for the industry.
View our latest analysis for Applus Services
Applus Services' Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, Applus Services was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 118.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 17% by next year, which is in a pretty sustainable range.
Applus Services' Dividend Has Lacked Consistency
Applus Services has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2015, the dividend has gone from €0.10 total annually to €0.16. This means that it has been growing its distributions at 6.1% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
We Could See Applus Services' Dividend Growing
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Applus Services has seen EPS rising for the last five years, at 6.4% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
Our Thoughts On Applus Services' Dividend
Overall, a consistent dividend is a good thing, and we think that Applus Services has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Applus Services that investors need to be conscious of moving forward. 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.
About BME:APPS
Applus Services
Provides testing, inspection, and certification services.
Reasonable growth potential with mediocre balance sheet.
