Hellenic Exchanges - Athens Stock Exchange's (ATH:EXAE) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Hellenic Exchanges - Athens Stock Exchange S.A. (ATH:EXAE) has announced that it will be paying its dividend of €0.29 on the 30th of June, an increased payment from last year's comparable dividend. This takes the dividend yield to 4.9%, which shareholders will be pleased with.

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Hellenic Exchanges - Athens Stock Exchange's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Hellenic Exchanges - Athens Stock Exchange's dividend made up quite a large proportion of earnings but only 61% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS is forecast to expand by 36.8%. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 75% - on the higher side, but we wouldn't necessarily say this is unsustainable.

Check out our latest analysis for Hellenic Exchanges - Athens Stock Exchange

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of €0.20 in 2015 to the most recent total annual payment of €0.156. Doing the maths, this is a decline of about 2.4% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

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

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Hellenic Exchanges - Athens Stock Exchange has seen EPS rising for the last five years, at 24% per annum. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Hellenic Exchanges - Athens Stock Exchange hasn't been doing.

Our Thoughts On Hellenic Exchanges - Athens Stock Exchange's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Hellenic Exchanges - Athens Stock Exchange's payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Hellenic Exchanges - Athens Stock Exchange that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.