Pharmanutra's (BIT:PHN) Dividend Will Be Increased To €1.00

Pharmanutra S.p.A.'s (BIT:PHN) dividend will be increasing from last year's payment of the same period to €1.00 on 7th of May. Based on this payment, the dividend yield for the company will be 2.0%, which is fairly typical for the industry.

View our latest analysis for Pharmanutra

Pharmanutra's Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. The last dividend was quite easily covered by Pharmanutra's earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 56.7%. If the dividend continues on this path, the payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

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Pharmanutra Is Still Building Its Track Record

Pharmanutra's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of €0.33 in 2018 to the most recent total annual payment of €1.00. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. Pharmanutra has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Pharmanutra has impressed us by growing EPS at 15% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Pharmanutra's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Pharmanutra in our latest insider ownership analysis. Is Pharmanutra not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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