Infrastrutture Wireless Italiane (BIT:INW) Will Pay A Larger Dividend Than Last Year At €0.5156

The board of Infrastrutture Wireless Italiane S.p.A. (BIT:INW) has announced that it will be paying its dividend of €0.5156 on the 21st of May, an increased payment from last year's comparable dividend. This makes the dividend yield 4.9%, which is above the industry average.

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Infrastrutture Wireless Italiane's Future Dividends May Potentially Be At Risk

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

The next 12 months is set to see EPS grow by 23.4%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 128%, which probably can't continue without putting some pressure on the balance sheet.

See our latest analysis for Infrastrutture Wireless Italiane

Infrastrutture Wireless Italiane's Dividend Has Lacked Consistency

Infrastrutture Wireless Italiane has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2016, the dividend has gone from €0.0945 total annually to €0.52. This implies that the company grew its distributions at a yearly rate of about 21% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Dividend Growth Could Be Constrained

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Infrastrutture Wireless Italiane has been growing its earnings per share at 10% a year over the past five years. However, the company isn't reinvesting a lot back into the business, so we would expect the growth rate to slow down somewhat in the future.

Infrastrutture Wireless Italiane's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. To that end, Infrastrutture Wireless Italiane has 2 warning signs (and 1 which is concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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