Vinci SA (EPA:DG) will increase its dividend from last year's comparable payment on the 27th of April to €3.00. This takes the annual payment to 3.8% of the current stock price, which is about average for the industry.
See our latest analysis for Vinci
Vinci's Payment Has Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, Vinci's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Over the next year, EPS is forecast to expand by 13.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 50% by next year, which is in a pretty sustainable range.
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 €1.77, compared to the most recent full-year payment of €4.00. This implies that the company grew its distributions at a yearly rate of about 8.5% 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.
The Dividend Has Growth Potential
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Vinci has seen EPS rising for the last five years, at 8.9% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
Vinci Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Vinci is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. As an example, we've identified 2 warning signs for Vinci that you should be aware of before investing. 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.
About ENXTPA:DG
Vinci
Engages in concessions, energy, and construction businesses in France and internationally.
Adequate balance sheet average dividend payer.
