Is Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative (EPA:CRLO) A Good Fit For Your Dividend Portfolio?

Could Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative (EPA:CRLO) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the 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 Loire Haute-Loire - Société coopérative. We'd guess that plenty of investors have purchased it for the income. There are a few simple ways to reduce the risks of buying Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - 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 Loire Haute-Loire - 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. Comparing dividend payments to a company's net profit after tax is a simple way of reality-checking whether a dividend is sustainable. In the last year, Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative paid out 26% of its profit as dividends. A medium payout ratio strikes a good balance between paying dividends, and keeping enough back to invest in the business. One of the risks is that management reinvests the retained capital poorly instead of paying a higher dividend.

Consider getting our latest analysis on Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative's financial position here.

Dividend Volatility

One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - 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 €2.4 in 2011, compared to €2.9 last year. This works out to be a compound annual growth rate (CAGR) of approximately 2.0% a year over that time.

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. In the last five years, Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative's earnings per share have shrunk at approximately 2.2% per annum. Declining earnings per share over a number of years is not a great sign for the dividend investor. Without some improvement, this does not bode well for the long term value of a company's dividend.

We'd also point out that Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - 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 Loire Haute-Loire - 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. Firstly, we like that Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative has a low and conservative payout ratio. 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. Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative might not be a bad business, but it doesn't show all of the characteristics we look for in a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Caisse régionale de Crédit Agricole Mutuel Loire Haute-Loire - Société coopérative (of which 1 makes us a bit uncomfortable!) you should know about.

If you are a dividend investor, you might also want to look at our curated list of dividend stocks yielding 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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