Dassault Aviation société anonyme's (EPA:AM) Shareholders Will Receive A Bigger Dividend Than Last Year

Dassault Aviation société anonyme (EPA:AM) has announced that it will be increasing its dividend from last year's comparable payment on the 22nd of May to €3.37. This takes the dividend yield to 1.7%, which shareholders will be pleased with.

See our latest analysis for Dassault Aviation société anonyme

Dassault Aviation société anonyme's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Dassault Aviation société anonyme is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS is forecast to expand by 98.0%. If the dividend continues on this path, the payout ratio could be 22% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of €0.89 in 2014 to the most recent total annual payment of €3.37. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. Dassault Aviation 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.

Dassault Aviation société anonyme May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings have grown at around 4.9% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Dassault Aviation société anonyme could always pay out a higher proportion of earnings to increase shareholder returns.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Dassault Aviation société anonyme's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Dassault Aviation société anonyme that investors should take into consideration. Is Dassault Aviation 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.