Hellenic Exchanges - Athens Stock Exchange (ATH:EXAE) Has Announced A Dividend Of €0.1565

Hellenic Exchanges - Athens Stock Exchange S.A. (ATH:EXAE) will pay a dividend of €0.1565 on the 20th of June. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.

See our latest analysis for Hellenic Exchanges - Athens Stock Exchange

Hellenic Exchanges - Athens Stock Exchange's Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, the company's dividend was higher than its profits, and made up 94% of cash flows. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.

Earnings per share could rise by 38.4% over the next year if things go the same way as they have for the last few years. If the dividend continues along recent trends, we estimate the payout ratio could reach 78%, which is on the higher side, but certainly still feasible.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the dividend has gone from €0.12 total annually to €0.152. This means that it has been growing its distributions at 2.4% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

Hellenic Exchanges - Athens Stock Exchange's Dividend Might Lack Growth

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Hellenic Exchanges - Athens Stock Exchange has impressed us by growing EPS at 38% per year over the past five years. While EPS is growing rapidly, Hellenic Exchanges - Athens Stock Exchange paid out a very high 112% of its income as dividends. If earnings continue to grow, this dividend may be sustainable, but we think a payout this high definitely bears watching.

Hellenic Exchanges - Athens Stock Exchange's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Strong earnings growth means Hellenic Exchanges - Athens Stock Exchange has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would probably look elsewhere for an income investment.

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. To that end, Hellenic Exchanges - Athens Stock Exchange has 2 warning signs (and 1 which is significant) we think you should know about. 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.