L'Air Liquide (EPA:AI) Will Pay A Larger Dividend Than Last Year At €3.20

L'Air Liquide S.A. (EPA:AI) will increase its dividend from last year's comparable payment on the 22nd of May to €3.20. This makes the dividend yield about the same as the industry average at 1.7%.

View our latest analysis for L'Air Liquide

L'Air Liquide's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, L'Air Liquide was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 37.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 42%, which is in the range that makes us comfortable with the sustainability of the dividend.

L'Air Liquide 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 2014, the dividend has gone from €1.71 total annually to €3.20. This works out to be a compound annual growth rate (CAGR) of approximately 6.5% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See L'Air Liquide's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. L'Air Liquide has seen EPS rising for the last five years, at 7.6% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

L'Air Liquide Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that L'Air Liquide is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 17 L'Air Liquide analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.