Is Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative (EPA:CIV) An Attractive Dividend Stock?

Today we'll take a closer look at Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative (EPA:CIV) 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. 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.

With Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative yielding 3.2% and having paid a dividend for over 10 years, many investors likely find the company quite interesting. It would not be a surprise to discover that many investors buy it for the dividends. There are a few simple ways to reduce the risks of buying Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative for its dividend, and we'll go through these below.

Explore this interactive chart for our latest analysis on Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative!

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. Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative paid out 91% of its profit as dividends, over the trailing twelve month period. This is quite a high payout ratio that suggests the dividend is not well covered by earnings.

Remember, you can always get a snapshot of Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative's latest financial position, by checking our visualisation of its financial health.

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 régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative's dividend payments. The dividend has been stable over the past 10 years, which is great. We think this could suggest some resilience to the business and its dividends. During the past 10-year period, the first annual payment was €3.1 in 2011, compared to €2.7 last year. This works out to be a decline of approximately 1.3% per year over that time.

When a company's per-share dividend falls we question if this reflects poorly on either external business conditions, or the company's capital allocation decisions. Either way, we find it hard to get excited about a company with a declining dividend.

Dividend Growth Potential

While dividend payments have been relatively reliable, it would also be nice if earnings per share (EPS) were growing, as this is essential to maintaining the dividend's purchasing power over the long term. Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative's EPS have fallen by approximately 26% per year during the past five years. 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.

We'd also point out that Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative issued a meaningful number of new shares in the past year. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

Conclusion

To summarise, shareholders should always check that Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative is paying out a larger percentage of its profit than we're comfortable with. 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. With this information in mind, we think Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative may not be an ideal dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, Caisse régionale de Crédit Agricole Mutuel d'Ille-et-Vilaine Société coopérative has 4 warning signs (and 1 which doesn't sit too well with us) we think 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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