Valsoia (BIT:VLS) Will Pay A Larger Dividend Than Last Year At €0.68

Valsoia S.p.A. (BIT:VLS) will increase its dividend on the 8th of May to €0.68, which is 79% higher than last year's payment from the same period of €0.38. This takes the dividend yield to 4.0%, which shareholders will be pleased with.

View our latest analysis for Valsoia

Valsoia's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Valsoia's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Earnings per share is forecast to rise by 16.0% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 84% which is a bit high but can definitely be sustainable.

Valsoia Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was €0.23 in 2014, and the most recent fiscal year payment was €0.38. This implies that the company grew its distributions at a yearly rate of about 5.1% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. However, Valsoia's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Valsoia is struggling to find viable investments, so it is returning more to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

We Really Like Valsoia's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Valsoia that investors should take into consideration. Is Valsoia not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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