Ipsos (EPA:IPS) Is Increasing Its Dividend To €1.65

The board of Ipsos SA (EPA:IPS) has announced that it will be paying its dividend of €1.65 on the 3rd of July, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 2.4%.

View our latest analysis for Ipsos

Ipsos' Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Ipsos 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 69.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of €0.70 in 2014 to the most recent total annual payment of €1.65. This implies that the company grew its distributions at a yearly rate of about 9.0% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Ipsos might have put its house in order since then, but we remain cautious.

We Could See Ipsos' Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Ipsos has impressed us by growing EPS at 8.4% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Ipsos Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Ipsos is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Ipsos that you should be aware of before investing. 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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