Séché Environnement's (EPA:SCHP) Dividend Will Be Increased To €1.00

By
Simply Wall St
Published
March 18, 2022
ENXTPA:SCHP
Source: Shutterstock

The board of Séché Environnement SA (EPA:SCHP) has announced that it will be increasing its dividend on the 12th of July to €1.00. Even though the dividend went up, the yield is still quite low at only 1.5%.

See our latest analysis for Séché Environnement

Séché Environnement's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Séché Environnement was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 39.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

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ENXTPA:SCHP Historic Dividend March 18th 2022

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from €1.30 in 2012 to the most recent annual payment of €1.00. Doing the maths, this is a decline of about 2.6% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Séché Environnement has impressed us by growing EPS at 46% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Séché Environnement's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Séché Environnement that investors should know about before committing capital to this stock. Is Séché Environnement not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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