Caisse Régionale de Crédit Agricole du Morbihan (EPA:CMO) Has Announced That It Will Be Increasing Its Dividend To €3.05

Caisse Régionale de Crédit Agricole du Morbihan (EPA:CMO) has announced that it will be increasing its periodic dividend on the 2nd of June to €3.05, which will be 6.3% higher than last year's comparable payment amount of €2.87. Despite this raise, the dividend yield of 3.9% is only a modest boost to shareholder returns.

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Caisse Régionale de Crédit Agricole du Morbihan's Payment Expected To Have Solid Earnings Coverage

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 du Morbihan has a long history of paying out a part of its earnings to shareholders. Based on Caisse Régionale de Crédit Agricole du Morbihan's last earnings report, the payout ratio is at a decent 27%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share could rise by 4.0% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Caisse Régionale de Crédit Agricole du Morbihan

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of €2.30 in 2015 to the most recent total annual payment of €2.87. This works out to be a compound annual growth rate (CAGR) of approximately 2.2% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Caisse Régionale de Crédit Agricole du Morbihan May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Earnings has been rising at 4.0% per annum over the last five years, which admittedly is a bit slow. If Caisse Régionale de Crédit Agricole du Morbihan is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. 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.

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. Taking the debate a bit further, we've identified 1 warning sign for Caisse Régionale de Crédit Agricole du Morbihan that investors need to be conscious of moving forward. Is Caisse Régionale de Crédit Agricole du Morbihan 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.