Thrace Plastics Holding (ATH:PLAT) Is Increasing Its Dividend To €0.17

Thrace Plastics Holding Company S.A. (ATH:PLAT) has announced that it will be increasing its periodic dividend on the 16th of June to €0.17, which will be 0.7% higher than last year's comparable payment amount of €0.169. This takes the dividend yield to 6.2%, which shareholders will be pleased with.

Our free stock report includes 2 warning signs investors should be aware of before investing in Thrace Plastics Holding. Read for free now.

Thrace Plastics Holding's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, the company's dividend was much higher than its earnings. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Looking forward, earnings per share is forecast to rise by 102.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 59%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

See our latest analysis for Thrace Plastics Holding

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was €0.025 in 2015, and the most recent fiscal year payment was €0.236. This implies that the company grew its distributions at a yearly rate of about 25% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Thrace Plastics Holding has seen EPS rising for the last five years, at 7.9% per annum. However, the company isn't reinvesting a lot back into the business, so we would expect the growth rate to slow down somewhat in the future.

The Dividend Could Prove To Be Unreliable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The payments are bit high to be considered sustainable, and the track record isn't the best. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Thrace Plastics Holding (of which 1 is a bit unpleasant!) you should know about. Is Thrace Plastics Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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