Société Générale Société anonyme's (EPA:GLE) Dividend Will Be Increased To €1.70

Société Générale Société anonyme (EPA:GLE) has announced that it will be increasing its dividend from last year's comparable payment on the 1st of June to €1.70. The payment will take the dividend yield to 7.7%, which is in line with the average for the industry.

See our latest analysis for Société Générale Société anonyme

Société Générale Société anonyme's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Société Générale Société anonyme has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Although the company has a long history in paying out dividends, Société Générale Société anonyme's latest earnings report shows a payout ratio of 98%. This is a sign that Société Générale Société anonyme is barely covering its dividend.

Analysts expect a massive rise in earnings per share in the next 3 years. They also expect the future payout ratio to be 35% over the same period, which would make us comfortable with the dividend's sustainability, despite the levels currently being elevated.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the annual payment back then was €0.45, compared to the most recent full-year payment of €1.70. This means that it has been growing its distributions at 14% per annum over that time. Société Générale Société anonyme has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

Dividend Growth May Be Hard To Come By

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's not great to see that Société Générale Société anonyme's earnings per share has fallen at approximately 9.5% per year over the past five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Société Générale Société anonyme's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Société Générale Société anonyme will make a great income stock. The track record isn't great, and the payments are a bit high to be considered sustainable. We would probably look elsewhere for an income investment.

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. As an example, we've identified 2 warning signs for Société Générale Société anonyme that you should be aware of before investing. Is Société Générale Société anonyme 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.