LVMH Moët Hennessy - Louis Vuitton Société Européenne (EPA:MC) Is Due To Pay A Dividend Of €5.50

LVMH Moët Hennessy - Louis Vuitton, Société Européenne (EPA:MC) has announced that it will pay a dividend of €5.50 per share on the 4th of December. Based on this payment, the dividend yield will be 2.0%, which is fairly typical for the industry.

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LVMH Moët Hennessy - Louis Vuitton Société Européenne's Projected Earnings Seem Likely To Cover Future Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, LVMH Moët Hennessy - Louis Vuitton Société Européenne's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 36.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 49% by next year, which is in a pretty sustainable range.

Check out our latest analysis for LVMH Moët Hennessy - Louis Vuitton Société Européenne

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 €3.20 in 2015, and the most recent fiscal year payment was €13.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. LVMH Moët Hennessy - Louis Vuitton Société Européenne has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. LVMH Moët Hennessy - Louis Vuitton Société Européenne has impressed us by growing EPS at 20% per year over the past five years. LVMH Moët Hennessy - Louis Vuitton Société Européenne is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

LVMH Moët Hennessy - Louis Vuitton Société Européenne Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think LVMH Moët Hennessy - Louis Vuitton Société Européenne might even raise payments in the future. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for LVMH Moët Hennessy - Louis Vuitton Société Européenne 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.