Stock Analysis

Recordati Industria Chimica e Farmaceutica (BIT:REC) Has Announced That It Will Be Increasing Its Dividend To €0.60

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Recordati Industria Chimica e Farmaceutica S.p.A. (BIT:REC) will increase its dividend from last year's comparable payment on the 24th of May to €0.60. This takes the annual payment to 2.9% of the current stock price, which is about average for the industry.

View our latest analysis for Recordati Industria Chimica e Farmaceutica

Recordati Industria Chimica e Farmaceutica's Payment Has 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 Recordati Industria Chimica e Farmaceutica's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Earnings per share is forecast to rise by 5.3% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 78% - on the higher side, but we wouldn't necessarily say this is unsustainable.

BIT:REC Historic Dividend March 19th 2023

Recordati Industria Chimica e Farmaceutica Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of €0.30 in 2013 to the most recent total annual payment of €1.10. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Recordati Industria Chimica e Farmaceutica May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Recordati Industria Chimica e Farmaceutica hasn't seen much change in its earnings per share over the last five years. The company has been growing at a pretty soft 1.8% per annum, and is paying out quite a lot of its earnings to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

Recordati Industria Chimica e Farmaceutica 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Recordati Industria Chimica e Farmaceutica 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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