Publicis Groupe's (EPA:PUB) Shareholders Will Receive A Bigger Dividend Than Last Year

Publicis Groupe S.A.'s (EPA:PUB) dividend will be increasing from last year's payment of the same period to €2.90 on 5th of July. The payment will take the dividend yield to 3.9%, which is in line with the average for the industry.

See our latest analysis for Publicis Groupe

Publicis Groupe's Earnings Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. 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.

Over the next year, EPS is forecast to expand by 24.4%. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was €0.70 in 2013, and the most recent fiscal year payment was €2.90. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Publicis Groupe Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Publicis Groupe has grown earnings per share at 5.2% 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.

Our Thoughts On Publicis Groupe's Dividend

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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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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