Buzzi Unicem (BIT:BZU) Will Pay A Larger Dividend Than Last Year At €0.45

Buzzi Unicem S.p.A.'s (BIT:BZU) dividend will be increasing from last year's payment of the same period to €0.45 on 24th of May. Although the dividend is now higher, the yield is only 2.0%, which is below the industry average.

See our latest analysis for Buzzi Unicem

Buzzi Unicem's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Buzzi Unicem's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 29.0%. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

Buzzi Unicem 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. Since 2013, the dividend has gone from €0.05 total annually to €0.45. This means that it has been growing its distributions at 25% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Buzzi Unicem's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Buzzi Unicem has been growing its earnings per share at 5.4% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Buzzi Unicem's prospects of growing its dividend payments in the future.

Buzzi Unicem Looks Like A Great Dividend Stock

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 13 Buzzi Unicem analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.