Stock Analysis

Caltagirone (BIT:CALT) Is Paying Out A Larger Dividend Than Last Year

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The board of Caltagirone SpA (BIT:CALT) has announced that it will be increasing its dividend by 50% on the 24th of May to €0.15, up from last year's comparable payment of €0.10. Despite this raise, the dividend yield of 2.6% is only a modest boost to shareholder returns.

See our latest analysis for Caltagirone

Caltagirone's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Caltagirone's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 5.6% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 19%, which is in the range that makes us comfortable with the sustainability of the dividend.

BIT:CALT Historic Dividend March 16th 2023

Caltagirone 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 annual payment back then was €0.03, compared to the most recent full-year payment of €0.10. This means that it has been growing its distributions at 13% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Caltagirone Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Caltagirone has seen EPS rising for the last five years, at 5.6% per annum. Caltagirone definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Caltagirone 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. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Caltagirone stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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