Does Caisse Regionale de Credit Agricole Mutuel Toulouse 31 (EPA:CAT31) Have A Place In Your Dividend Portfolio?

Today we'll take a closer look at Caisse Regionale de Credit Agricole Mutuel Toulouse 31 (EPA:CAT31) from a dividend investor's perspective. Owning a strong business and reinvesting the dividends is widely seen as an attractive way of growing your wealth. Unfortunately, it's common for investors to be enticed in by the seemingly attractive yield, and lose money when the company has to cut its dividend payments.

In this case, Caisse Regionale de Credit Agricole Mutuel Toulouse 31 likely looks attractive to investors, given its 4.5% dividend yield and a payment history of over ten years. It would not be a surprise to discover that many investors buy it for the dividends. Some simple research can reduce the risk of buying Caisse Regionale de Credit Agricole Mutuel Toulouse 31 for its dividend - read on to learn more.

Explore this interactive chart for our latest analysis on Caisse Regionale de Credit Agricole Mutuel Toulouse 31!

Payout ratios

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. In the last year, Caisse Regionale de Credit Agricole Mutuel Toulouse 31 paid out 71% of its profit as dividends. This is a fairly normal payout ratio among most businesses. It allows a higher dividend to be paid to shareholders, but does limit the capital retained in the business - which could be good or bad.

We update our data on Caisse Regionale de Credit Agricole Mutuel Toulouse 31 every 24 hours, so you can always get our latest analysis of its financial health, here.

Dividend Volatility

From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. For the purpose of this article, we only scrutinise the last decade of Caisse Regionale de Credit Agricole Mutuel Toulouse 31's dividend payments. During this period the dividend has been stable, which could imply the business could have relatively consistent earnings power. During the past 10-year period, the first annual payment was €3.4 in 2010, compared to €4.4 last year. Dividends per share have grown at approximately 2.5% per year over this time.

While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is unappealing.

Dividend Growth Potential

Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. Over the past five years, it looks as though Caisse Regionale de Credit Agricole Mutuel Toulouse 31's EPS have declined at around 18% a year. A sharp decline in earnings per share is not great from from a dividend perspective, as even conservative payout ratios can come under pressure if earnings fall far enough.

Conclusion

To summarise, shareholders should always check that Caisse Regionale de Credit Agricole Mutuel Toulouse 31's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. Caisse Regionale de Credit Agricole Mutuel Toulouse 31's payout ratio is within normal bounds. Moreover, earnings have been shrinking. While the dividends have been fairly steady, we'd wonder for how much longer this will be sustainable if earnings continue to decline. While we're not hugely bearish on it, overall we think there are potentially better dividend stocks than Caisse Regionale de Credit Agricole Mutuel Toulouse 31 out there.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Caisse Regionale de Credit Agricole Mutuel Toulouse 31 (1 is concerning!) that you should be aware of before investing.

Looking for more high-yielding dividend ideas? Try our curated list of dividend stocks with a yield above 3%.

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This article by Simply Wall St is general in nature. 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.
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