HITECHPROS Société anonyme (EPA:ALHIT) Is Reducing Its Dividend To €1.00

HITECHPROS Société anonyme's (EPA:ALHIT) dividend is being reduced by 23% to €1.00 per share on 5th of September, in comparison to last year's comparable payment of €1.30. The yield is still above the industry average at 7.7%.

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HITECHPROS Société anonyme's Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, HITECHPROS Société anonyme's profits didn't cover the dividend, but the company was generating enough cash instead. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

EPS is set to fall by 1.5% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 98%, which is definitely a bit high to be sustainable going forward.

View our latest analysis for HITECHPROS Société anonyme

HITECHPROS Société anonyme Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of €0.65 in 2015 to the most recent total annual payment of €1.30. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% 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.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. However, HITECHPROS Société anonyme's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

In Summary

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We don't think HITECHPROS Société anonyme is a great stock to add to your portfolio if income is your focus.

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