Nexans (EPA:NEX) Is Paying Out A Larger Dividend Than Last Year

The board of Nexans S.A. (EPA:NEX) has announced that it will be paying its dividend of €2.60 on the 21st of May, an increased payment from last year's comparable dividend. This makes the dividend yield 2.9%, which is above the industry average.

Our free stock report includes 1 warning sign investors should be aware of before investing in Nexans. Read for free now.

Nexans' Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by Nexans' earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 29.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 38% by next year, which is in a pretty sustainable range.

View our latest analysis for Nexans

Nexans' Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2017, the dividend has gone from €0.50 total annually to €2.60. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Nexans has impressed us by growing EPS at 35% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like Nexans' Dividend

Overall, a dividend increase is always good, and we think that Nexans 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Nexans that investors should know about before committing capital to this stock. Is Nexans not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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