Aeroporto Guglielmo Marconi di Bologna's (BIT:ADB) Dividend Will Be Increased To €0.471

The board of Aeroporto Guglielmo Marconi di Bologna S.p.A. (BIT:ADB) has announced that it will be paying its dividend of €0.471 on the 14th of May, an increased payment from last year's comparable dividend. This makes the dividend yield 5.7%, which is above the industry average.

Check out our latest analysis for Aeroporto Guglielmo Marconi di Bologna

Aeroporto Guglielmo Marconi di Bologna's Projections Indicate Future Payments May Be Unsustainable

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by Aeroporto Guglielmo Marconi di Bologna's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to fall by 32.7% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 106%, which could put the dividend under pressure if earnings don't start to improve.

Aeroporto Guglielmo Marconi di Bologna's Dividend Has Lacked Consistency

Aeroporto Guglielmo Marconi di Bologna 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 €0.17 total annually to €0.471. This means that it has been growing its distributions at 12% per annum over that time. 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.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings have grown at around 3.2% a year for the past five years, which isn't massive but still better than seeing them shrink. Growth of 3.2% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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. Just as an example, we've come across 2 warning signs for Aeroporto Guglielmo Marconi di Bologna you should be aware of, and 1 of them is concerning. Is Aeroporto Guglielmo Marconi di Bologna 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.