Applus Services (BME:APPS) Will Pay A Dividend Of €0.1296

Applus Services, S.A. (BME:APPS) will pay a dividend of €0.1296 on the 6th of July. This means that the annual payment will be 1.8% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Applus Services

Applus Services' Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. The last dividend was quite easily covered by Applus Services' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 88.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

Applus Services' Dividend Has Lacked Consistency

Looking back, Applus Services' dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of €0.10 in 2015 to the most recent total annual payment of €0.16. This works out to be a compound annual growth rate (CAGR) of approximately 6.1% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Applus Services might have put its house in order since then, but we remain cautious.

We Could See Applus Services' Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Applus Services has impressed us by growing EPS at 6.4% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

In Summary

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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Applus Services that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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