Should Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative (EPA:CCN) Be Part Of Your Dividend Portfolio?

Dividend paying stocks like Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative (EPA:CCN) tend to be popular with investors, and for good reason - some research suggests a significant amount of all stock market returns come from reinvested dividends. On the other hand, investors have been known to buy a stock because of its yield, and then lose money if the company's dividend doesn't live up to expectations.

A high yield and a long history of paying dividends is an appealing combination for Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative. It would not be a surprise to discover that many investors buy it for the dividends. Some simple analysis can reduce the risk of holding Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative for its dividend, and we'll focus on the most important aspects below.

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Payout ratios

Companies (usually) pay dividends out of their earnings. If a company is paying more than it earns, the dividend might have to be cut. 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 Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative paid out 53% 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 Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative every 24 hours, so you can always get our latest analysis of its financial health, here.

Dividend Volatility

Before buying a stock for its income, we want to see if the dividends have been stable in the past, and if the company has a track record of maintaining its dividend. Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative has been paying dividends for a long time, but for the purpose of this analysis, we only examine the past 10 years of 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 €4.5 in 2010, compared to €4.5 last year. Dividend payments have grown at less than 1% a year over this period.

Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think is seriously impressive.

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. Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative's earnings per share have shrunk at 14% a year over the past five years. With this kind of significant decline, we always wonder what has changed in the business. Dividends are about stability, and Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative's earnings per share, which support the dividend, have been anything but stable.

We'd also point out that Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative issued a meaningful number of new shares in the past year. Regularly issuing new shares can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Conclusion

When we look at a dividend stock, we need to form a judgement on whether the dividend will grow, if the company is able to maintain it in a wide range of economic circumstances, and if the dividend payout is sustainable. First, we think Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative has an acceptable payout ratio. Second, earnings per share have actually shrunk, but at least the dividends have been relatively stable. In summary, we're unenthused by Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative as a dividend stock. It's not that we think it is a bad company; it simply falls short of our criteria in some key areas.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Caisse Régionale de Crédit Agricole Mutuel de Normandie-Seine Société coopérative (of which 1 shouldn't be ignored!) you should know about.

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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