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

The board of Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France (EPA:CAF) has announced it will be reducing its dividend by 12% from last year's payment of €2.93 on the 5th of May, with shareholders receiving €2.58. This means that the dividend yield is 4.4%, which is a bit low when comparing to other companies in the industry.

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Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France's Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having distributed dividends for at least 10 years, Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France has a long history of paying out a part of its 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.

EPS is set to fall by 8.0% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could be 39%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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 Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of €3.40 in 2015 to the most recent total annual payment of €2.93. The dividend has shrunk at around 1.5% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Come By

Investors could be attracted to the stock based on the quality of its payment history. However, initial appearances might be deceiving. In the last five years, Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France's earnings per share has shrunk at approximately 8.0% per annum. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

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

Overall, we think that Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France could make a reasonable income stock, even though it did cut the dividend this year. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile-de-France that investors should know about before committing capital to this 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.