Legrand's (EPA:LR) Upcoming Dividend Will Be Larger Than Last Year's

Legrand SA's (EPA:LR) dividend will be increasing from last year's payment of the same period to €2.20 on 2nd of June. Based on this payment, the dividend yield for the company will be 2.0%, which is fairly typical for the industry.

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Legrand's Payment Could Potentially Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. The last dividend was quite easily covered by Legrand's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 19.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 44% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Legrand

Legrand Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was €1.10, compared to the most recent full-year payment of €2.20. This implies that the company grew its distributions at a yearly rate of about 7.2% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Legrand Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Legrand has seen EPS rising for the last five years, at 8.3% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Legrand Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Legrand is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 18 Legrand 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.