Adris grupa d. d (ZGSE:ADRS) Will Pay A Larger Dividend Than Last Year At €2.57

The board of Adris grupa d. d. (ZGSE:ADRS) has announced that it will be increasing its dividend by 9.4% on the 24th of July to €2.57, up from last year's comparable payment of €2.35. Based on this payment, the dividend yield for the company will be 2.9%, which is fairly typical for the industry.

View our latest analysis for Adris grupa d. d

Adris grupa d. d's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Adris grupa d. d's dividend was only 56% of earnings, however it was paying out 127% of free 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.

Looking forward, earnings per share could rise by 42.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 51% by next year, which we think can be pretty sustainable going forward.

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. Since 2014, the dividend has gone from €0.919 total annually to €2.35. This works out to be a compound annual growth rate (CAGR) of approximately 9.8% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Adris grupa d. d might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Adris grupa d. d has impressed us by growing EPS at 43% per year over the past three years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Adris grupa d. d's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Adris grupa d. d that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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