Industrie Chimiche Forestali (BIT:ICF) Is Paying Out A Dividend Of €0.20

Industrie Chimiche Forestali S.p.A. (BIT:ICF) will pay a dividend of €0.20 on the 21st of May. This means the annual payment is 3.6% of the current stock price, which is above the average for the industry.

Our free stock report includes 1 warning sign investors should be aware of before investing in Industrie Chimiche Forestali. Read for free now.

Industrie Chimiche Forestali's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Industrie Chimiche Forestali's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 82.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

See our latest analysis for Industrie Chimiche Forestali

Industrie Chimiche Forestali Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of €0.14 in 2021 to the most recent total annual payment of €0.20. This implies that the company grew its distributions at a yearly rate of about 9.3% over that duration. Industrie Chimiche Forestali has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

Dividend Growth May Be Hard To Come By

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. In the last five years, Industrie Chimiche Forestali's earnings per share has shrunk at approximately 9.0% per annum. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Industrie Chimiche Forestali's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Industrie Chimiche Forestali that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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