Carel Industries (BIT:CRL) Is Paying Out Less In Dividends Than Last Year

Carel Industries S.p.A.'s (BIT:CRL) dividend is being reduced from last year's payment covering the same period to €0.165 on the 25th of June. This payment takes the dividend yield to 0.9%, which only provides a modest boost to overall returns.

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Carel Industries' Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Carel Industries was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 32.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.

See our latest analysis for Carel Industries

Carel Industries Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2019, the annual payment back then was €0.10, compared to the most recent full-year payment of €0.165. This implies that the company grew its distributions at a yearly rate of about 8.7% over that duration. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

Carel Industries Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Carel Industries has seen EPS rising for the last five years, at 9.7% per annum. Carel Industries definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Carel Industries' Dividend

In general, we don't like to see the dividend being cut, especially when the company has such high potential like Carel Industries does. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. As an example, we've identified 1 warning sign for Carel Industries 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.