La Française des Jeux Société anonyme's (EPA:FDJ) Upcoming Dividend Will Be Larger Than Last Year's

La Française des Jeux Société anonyme (EPA:FDJ) has announced that it will be increasing its dividend from last year's comparable payment on the 7th of May to €1.78. This makes the dividend yield 4.7%, which is above the industry average.

View our latest analysis for La Française des Jeux Société anonyme

La Française des Jeux Société anonyme's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last payment made up 80% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

EPS is set to grow by 16.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 77%, which is on the higher side, but certainly still feasible.

La Française des Jeux Société anonyme Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2020, the annual payment back then was €0.45, compared to the most recent full-year payment of €1.78. This implies that the company grew its distributions at a yearly rate of about 41% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

La Française des Jeux Société anonyme Might Find It Hard To Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. La Française des Jeux Société anonyme has seen EPS rising for the last five years, at 20% per annum. However, La Française des Jeux Société anonyme isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

In Summary

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 would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for La Française des Jeux Société anonyme that investors should take into consideration. Is La Française des Jeux Société anonyme not quite the opportunity you were looking for? Why not check out our selection of top 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.