Atresmedia Corporación de Medios de Comunicación (BME:A3M) Is Increasing Its Dividend To €0.1944

Atresmedia Corporación de Medios de Comunicación, S.A. (BME:A3M) will increase its dividend from last year's comparable payment on the 20th of June to €0.1944. This makes the dividend yield 8.8%, which is above the industry average.

See our latest analysis for Atresmedia Corporación de Medios de Comunicación

Atresmedia Corporación de Medios de Comunicación's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Atresmedia Corporación de Medios de Comunicación's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 30.2% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 69%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from €0.11 total annually to €0.42. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Atresmedia Corporación de Medios de Comunicación 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.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Atresmedia Corporación de Medios de Comunicación has grown earnings per share at 14% 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 Atresmedia Corporación de Medios de Comunicación's Dividend

Overall, a dividend increase is always good, and we think that Atresmedia Corporación de Medios de Comunicación is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. Just as an example, we've come across 2 warning signs for Atresmedia Corporación de Medios de Comunicación you should be aware of, and 1 of them can't be ignored. 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.