Infrastrutture Wireless Italiane's (BIT:INW) Upcoming Dividend Will Be Larger Than Last Year's

Infrastrutture Wireless Italiane S.p.A. (BIT:INW) will increase its dividend from last year's comparable payment on the 24th of May to €0.3467. Despite this raise, the dividend yield of 2.9% is only a modest boost to shareholder returns.

See our latest analysis for Infrastrutture Wireless Italiane

Infrastrutture Wireless Italiane's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

Over the next year, EPS is forecast to expand by 56.0%. If the dividend continues along recent trends, we estimate the payout ratio could reach 80%, which is on the higher side, but certainly still feasible.

Infrastrutture Wireless Italiane's Dividend Has Lacked Consistency

Looking back, Infrastrutture Wireless Italiane's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from an annual total of €0.0945 in 2016 to the most recent total annual payment of €0.3467. This implies that the company grew its distributions at a yearly rate of about 20% 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 May Be Hard To Achieve

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Infrastrutture Wireless Italiane has seen EPS rising for the last five years, at 7.4% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Infrastrutture Wireless Italiane's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Infrastrutture Wireless Italiane will make a great income stock. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Infrastrutture Wireless Italiane has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. Is Infrastrutture Wireless Italiane not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.