Piraeus Port Authority (ATH:PPA) Is Increasing Its Dividend To €1.92

The board of Piraeus Port Authority S.A. (ATH:PPA) has announced that it will be paying its dividend of €1.92 on the 8th of August, an increased payment from last year's comparable dividend. This makes the dividend yield 4.3%, which is above the industry average.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Piraeus Port Authority's stock price has increased by 31% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Piraeus Port Authority's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last payment was quite easily covered by earnings, but it made up 114% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

If the trend of the last few years continues, EPS will grow by 19.8% over the next 12 months. If the dividend continues on this path, the payout ratio could be 59% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Piraeus Port Authority

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from €0.0989 total annually to €1.92. This works out to be a compound annual growth rate (CAGR) of approximately 35% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Piraeus Port Authority has grown earnings per share at 20% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On Piraeus Port Authority's Dividend

Overall, we always like to see the dividend being raised, but we don't think Piraeus Port Authority will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. 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. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Piraeus Port Authority you should be aware of, and 1 of them is a bit unpleasant. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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