Derichebourg (EPA:DBG) Has Announced That Its Dividend Will Be Reduced To €0.16

Derichebourg SA (EPA:DBG) has announced that on 16th of February, it will be paying a dividend of€0.16, which a reduction from last year's comparable dividend. The dividend yield of 3.4% is still a nice boost to shareholder returns, despite the cut.

View our latest analysis for Derichebourg

Derichebourg's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Derichebourg's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 68.7% over the next year. If the dividend continues on this path, the payout ratio could be 14% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of €0.06 in 2014 to the most recent total annual payment of €0.16. This means that it has been growing its distributions at 10% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Derichebourg has seen EPS rising for the last five years, at 15% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Derichebourg's prospects of growing its dividend payments in the future.

We Really Like Derichebourg's Dividend

Overall, we think that Derichebourg could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All of these factors considered, we think this has solid potential as a dividend 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 instance, we've picked out 3 warning signs for Derichebourg that investors should take into consideration. Is Derichebourg not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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