Groupe Guillin's (EPA:ALGIL) Upcoming Dividend Will Be Larger Than Last Year's

The board of Groupe Guillin S.A. (EPA:ALGIL) has announced that the dividend on 27th of June will be increased to €1.10, which will be 38% higher than last year's payment of €0.80 which covered the same period. The payment will take the dividend yield to 2.8%, which is in line with the average for the industry.

Check out our latest analysis for Groupe Guillin

Groupe Guillin's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Groupe Guillin's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 20.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from €0.20 total annually to €0.80. This means that it has been growing its distributions at 15% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Groupe Guillin has seen EPS rising for the last five years, at 7.4% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Groupe Guillin that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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