La Française des Jeux Société anonyme (EPA:FDJ) Is Increasing Its Dividend To €1.78

La Française des Jeux Société anonyme's (EPA:FDJ) periodic dividend will be increasing on the 7th of May to €1.78, with investors receiving 30% more than last year's €1.37. This makes the dividend yield about the same as the industry average at 3.5%.

Check out our latest analysis for La Française des Jeux Société anonyme

La Française des Jeux Société anonyme's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last payment made up 79% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS is forecast to expand by 17.5%. If the dividend continues along recent trends, we estimate the payout ratio could reach 76%, which is on the higher side, but certainly still feasible.

La Française des Jeux Société anonyme Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of €0.45 in 2020 to the most recent total annual payment of €1.37. This implies that the company grew its distributions at a yearly rate of about 32% over that duration. La Française des Jeux Société anonyme has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Dividend Growth Could Be Constrained

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. La Française des Jeux Société anonyme has seen EPS rising for the last five years, at 20% per annum. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which La Française des Jeux Société anonyme hasn't been doing.

Our Thoughts On La Française des Jeux Société anonyme's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think La Française des Jeux Société anonyme is a great stock to add to your portfolio if income is your focus.

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 example, we've picked out 1 warning sign for La Française des Jeux Société anonyme that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.