Philippos Nakas (ATH:NAKAS) Will Pay A Smaller Dividend Than Last Year

Philippos Nakas S.A. (ATH:NAKAS) is reducing its dividend from last year's comparable payment to €0.07 on the 15th of January. However, the dividend yield of 2.5% still remains in a typical range for the industry.

View our latest analysis for Philippos Nakas

Philippos Nakas' Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Philippos Nakas' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Earnings per share could rise by 18.9% over the next year if things go the same way as they have for the last few years. If recent patterns in the dividend continue, the payout ratio in 12 months could be 90% which is a bit high but can definitely be sustainable.

Philippos Nakas' Dividend Has Lacked Consistency

Looking back, Philippos Nakas' dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2018, the annual payment back then was €0.05, compared to the most recent full-year payment of €0.08. This means that it has been growing its distributions at 9.9% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Philippos Nakas has seen EPS rising for the last five years, at 19% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Philippos Nakas' prospects of growing its dividend payments in the future.

Philippos Nakas Looks Like A Great Dividend Stock

Overall, we think that Philippos Nakas could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

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. For instance, we've picked out 2 warning signs for Philippos Nakas that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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