Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France (EPA:CAF) Will Pay A Smaller Dividend Than Last Year

Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France (EPA:CAF) is reducing its dividend to €2.58 on the 5th of Maywhich is 12% less than last year's comparable payment of €2.93. This means that the annual payment is 3.9% of the current stock price, which is lower than what the rest of the industry is paying.

See our latest analysis for Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France

Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 35%, which means that Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France would be able to pay its last dividend without pressure on the balance sheet.

Unless the company can turn things around, EPS could fall by 2.5% over the next year. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 31%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from €3.40 total annually to €2.93. This works out to be a decline of approximately 1.5% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. It's not great to see that Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France's earnings per share has fallen at approximately 2.5% per year over the past five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

Our Thoughts On Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France's Dividend

Overall, while it's not great to see that the dividend has been cut, we think the company is now in a good position to make consistent payments going into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France stock. Is Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France 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.