Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) Is Increasing Its Dividend To HUF100.11

Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság (BUSE:MTELEKOM) will increase its dividend on the 20th of May to HUF100.11, which is 124% higher than last year's payment from the same period of HUF44.70. This takes the annual payment to 2.6% of the current stock price, which unfortunately is below what the industry is paying.

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Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 38.8%. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság

Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság's Dividend Has Lacked Consistency

It's comforting to see that Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The annual payment during the last 9 years was HUF15.00 in 2016, and the most recent fiscal year payment was HUF44.70. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság has seen EPS rising for the last five years, at 34% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Magyar Telekom Távközlési Nyilvánosan Müködö Részvénytársaság for free with public analyst estimates for the company. 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.