Atresmedia Corporación de Medios de Comunicación's (BME:A3M) Upcoming Dividend Will Be Larger Than Last Year's

Atresmedia Corporación de Medios de Comunicación, S.A. (BME:A3M) will increase its dividend from last year's comparable payment on the 18th of June to €0.3807. This makes the dividend yield 9.1%, which is above the industry average.

Check out our latest analysis for Atresmedia Corporación de Medios de Comunicación

Atresmedia Corporación de Medios de Comunicación's Projections Indicate Future Payments May Be Unsustainable

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 a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

EPS is set to fall by 14.9% over the next 12 months. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 128%, which is definitely a bit high to be sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from €0.20 total annually to €0.45. This means that it has been growing its distributions at 8.4% per annum over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Atresmedia Corporación de Medios de Comunicación May Find It Hard To Grow The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Atresmedia Corporación de Medios de Comunicación hasn't seen much change in its earnings per share over the last five years. The company has been growing at a pretty soft 0.4% per annum, and is paying out quite a lot of its earnings to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for Atresmedia Corporación de Medios de Comunicación you should be aware of, and 1 of them shouldn't be ignored. Is Atresmedia Corporación de Medios de Comunicación not quite the opportunity you were looking for? Why not check out our selection of top 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.