Thermador Groupe (EPA:THEP) Will Pay A Larger Dividend Than Last Year At €2.08

Thermador Groupe SA (EPA:THEP) will increase its dividend from last year's comparable payment on the 14th of April to €2.08. Despite this raise, the dividend yield of 2.1% is only a modest boost to shareholder returns.

View our latest analysis for Thermador Groupe

Thermador Groupe's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Thermador Groupe was paying a whopping 135% as a dividend, but this only made up 32% of its overall earnings. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

The next year is set to see EPS grow by 13.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

Thermador Groupe Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from €1.53 total annually to €2.08. This means that it has been growing its distributions at 3.2% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Thermador Groupe has impressed us by growing EPS at 17% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Thermador Groupe's Dividend

Overall, we always like to see the dividend being raised, but we don't think Thermador Groupe will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Thermador Groupe that you should be aware of before investing. Is Thermador Groupe not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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