Dassault Aviation Société anonyme's (EPA:AM) Upcoming Dividend Will Be Larger Than Last Year's

Dassault Aviation Société anonyme (EPA:AM) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of May to €3.00. Based on this payment, the dividend yield for the company will be 1.6%, which is fairly typical for the industry.

See our latest analysis for Dassault Aviation Société anonyme

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

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, Dassault Aviation Société anonyme's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 44.1%. If the dividend continues on this path, the payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was €0.85 in 2013, and the most recent fiscal year payment was €3.00. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. 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.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Dassault Aviation Société anonyme has only grown its earnings per share at 2.4% per annum over the past five years. 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.

Our Thoughts On Dassault Aviation Société anonyme's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 12 Dassault Aviation Société anonyme analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield 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.