Société Générale Société anonyme's (EPA:GLE) Dividend Is Being Reduced To €0.90

Société Générale Société anonyme (EPA:GLE) is reducing its dividend from last year's comparable payment to €0.90 on the 29th of May. This means that the annual payment is 3.9% of the current stock price, which is lower than what the rest of the industry is paying.

Check out our latest analysis for Société Générale Société anonyme

Société Générale Société anonyme's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Société Générale Société anonyme has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Société Générale Société anonyme's payout ratio of 29% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 94.0%. Analysts estimate the future payout ratio will be 28% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was €0.45 in 2014, and the most recent fiscal year payment was €0.90. This implies that the company grew its distributions at a yearly rate of about 7.2% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth Is Doubtful

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Over the past five years, it looks as though Société Générale Société anonyme's EPS has declined at around 5.9% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

In Summary

Overall, the dividend looks like it may have been a bit high, which explains why it has now been cut. While Société Générale Société anonyme is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Société Générale Société anonyme that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.