Bureau Veritas (EPA:BVI) Is Increasing Its Dividend To €0.83

Bureau Veritas SA's (EPA:BVI) dividend will be increasing from last year's payment of the same period to €0.83 on 4th of July. This takes the annual payment to 3.1% of the current stock price, which is about average for the industry.

View our latest analysis for Bureau Veritas

Bureau Veritas' Earnings Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before this announcement, Bureau Veritas was paying out 75% of earnings, but a comparatively small 57% of free cash flows. This leaves plenty of cash for reinvestment into the business.

The next year is set to see EPS grow by 32.0%. If the dividend continues on this path, the payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was €0.48 in 2014, and the most recent fiscal year payment was €0.83. This means that it has been growing its distributions at 5.6% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Bureau Veritas Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Bureau Veritas has been growing its earnings per share at 7.8% a year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

Our Thoughts On Bureau Veritas' Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Bureau Veritas that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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