Fourlis Holdings' (ATH:FOYRK) Dividend Will Be Increased To €0.12

Fourlis Holdings S.A. (ATH:FOYRK) will increase its dividend on the 3rd of July to €0.12, which is 9.1% higher than last year's payment from the same period of €0.11. This takes the annual payment to 2.6% of the current stock price, which is about average for the industry.

View our latest analysis for Fourlis Holdings

Fourlis Holdings' Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Fourlis Holdings is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Looking forward, earnings per share could rise by 6.7% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

Fourlis Holdings' Dividend Has Lacked Consistency

Fourlis Holdings has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2018, the annual payment back then was €0.10, compared to the most recent full-year payment of €0.11. This means that it has been growing its distributions at 1.6% 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.

We Could See Fourlis Holdings' Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Fourlis Holdings has seen EPS rising for the last five years, at 6.7% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Fourlis Holdings' Dividend

Overall, we always like to see the dividend being raised, but we don't think Fourlis Holdings will make a great income stock. While Fourlis Holdings is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Fourlis Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing. 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.