Publicis Groupe's (EPA:PUB) Dividend Will Be Increased To €3.60

Publicis Groupe S.A. (EPA:PUB) will increase its dividend from last year's comparable payment on the 3rd of July to €3.60. This takes the dividend yield to 4.3%, which shareholders will be pleased with.

Our free stock report includes 1 warning sign investors should be aware of before investing in Publicis Groupe. Read for free now.

Publicis Groupe's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Publicis Groupe's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 19.1% over the next year. If the dividend continues on this path, the payout ratio could be 46% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Publicis Groupe

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was €1.20 in 2015, and the most recent fiscal year payment was €3.60. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year 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 Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Publicis Groupe has impressed us by growing EPS at 13% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Publicis Groupe's Dividend

Overall, a dividend increase is always good, and we think that Publicis Groupe is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Publicis Groupe that investors should take into consideration. 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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