Derichebourg (EPA:DBG) Is Paying Out Less In Dividends Than Last Year

Derichebourg SA (EPA:DBG) has announced that on 12th of February, it will be paying a dividend of€0.13, which a reduction from last year's comparable dividend. This means that the annual payment will be 2.4% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Derichebourg

Derichebourg's Future Dividend Projections Appear Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Derichebourg's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 152.6%. If the dividend continues on this path, the payout ratio could be 13% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was €0.06 in 2014, and the most recent fiscal year payment was €0.13. This works out to be a compound annual growth rate (CAGR) of approximately 8.0% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Derichebourg might have put its house in order since then, but we remain cautious.

Derichebourg Could Grow Its Dividend

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. It's encouraging to see that Derichebourg has been growing its earnings per share at 6.3% a year over the past five years. Derichebourg definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, while it's not great to see that the dividend has been cut, we think the company is now in a good position to make consistent payments going into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Derichebourg that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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