Crédit Agricole (EPA:ACA) Will Pay A Dividend Of €1.05

The board of Crédit Agricole S.A. (EPA:ACA) has announced that it will pay a dividend of €1.05 per share on the 1st of June. Based on this payment, the dividend yield on the company's stock will be 9.0%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Crédit Agricole

Crédit Agricole's Earnings Will Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Crédit Agricole has a good history of paying out dividends, with its current track record at 9 years. Based on Crédit Agricole's last earnings report, the payout ratio is at a decent 64%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to fall by 5.0%. Despite that, analysts estimate the future payout ratio could be 51% over the same time period, which is in a pretty comfortable range.

Crédit Agricole's Dividend Has Lacked Consistency

Looking back, Crédit Agricole's dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. Since 2014, the annual payment back then was €0.35, compared to the most recent full-year payment of €1.05. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Crédit Agricole has impressed us by growing EPS at 10% 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.

Crédit Agricole Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Crédit Agricole that you should be aware of before investing. Is Crédit Agricole 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.