Bonduelle's (EPA:BON) Dividend Will Be Increased To €0.45

By
Simply Wall St
Published
October 03, 2021
ENXTPA:BON
Source: Shutterstock

Bonduelle SCA (EPA:BON) will increase its dividend on the 5th of January to €0.45. Even though the dividend went up, the yield is still quite low at only 2.1%.

See our latest analysis for Bonduelle

Bonduelle's Earnings Easily Cover the Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Bonduelle's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 20.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 21%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
ENXTPA:BON Historic Dividend October 4th 2021

Bonduelle Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2011, the first annual payment was €0.38, compared to the most recent full-year payment of €0.45. This means that it has been growing its distributions at 1.8% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Bonduelle May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Bonduelle hasn't seen much change in its earnings per share over the last five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

Bonduelle Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. 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 example, we've picked out 1 warning sign for Bonduelle that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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