Assystem (EPA:ASY) Is Due To Pay A Dividend Of €1.00

By
Simply Wall St
Published
May 27, 2021
ENXTPA:ASY
Source: Shutterstock

The board of Assystem S.A. (EPA:ASY) has announced that it will pay a dividend of €1.00 per share on the 15th of July. This means the annual payment is 3.4% of the current stock price, which is above the average for the industry.

View our latest analysis for Assystem

Assystem's Distributions May Be Difficult To Sustain

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Even though Assystem isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.

Over the next year, EPS could expand by 5.9% if recent trends continue. We like to see the company moving towards profitability, but this probably won't be enough for it to post positive net income this year. The positive free cash flows give us some comfort, however, that the dividend could continue to be sustained.

historic-dividend
ENXTPA:ASY Historic Dividend May 28th 2021

Assystem Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The first annual payment during the last 10 years was €0.45 in 2011, and the most recent fiscal year payment was €1.00. This implies that the company grew its distributions at a yearly rate of about 8.3% 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.

Assystem Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see Assystem has been growing its earnings per share at 5.9% a year over the past five years. Even though the company isn't making a profit, strong earnings growth could turn that around in the near future. All is not lost, but the future of the dividend definitely rests upon the company's ability to become profitable soon.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Assystem that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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