Société Générale Société anonyme's (EPA:GLE) Upcoming Dividend Will Be Larger Than Last Year's

The board of Société Générale Société anonyme (EPA:GLE) has announced that it will be paying its dividend of €1.70 on the 1st of June, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 8.0%, which is fairly typical 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

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, Société Générale Société anonyme has a long history of paying out a part of its 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 may be worrying, as it shows 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

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was €0.45, compared to the most recent full-year payment of €1.70. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

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 9.5% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. 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.

The Dividend Could Prove To Be Unreliable

In summary, while it's always good to see the dividend being raised, we don't think Société Générale Société anonyme's payments are rock solid. The payments are bit high to be considered sustainable, and the track record isn't the best. 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. However, there are other things to consider for investors when analysing stock performance. 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.