Hera (BIT:HER) Is Increasing Its Dividend To €0.14

Hera S.p.A.'s (BIT:HER) dividend will be increasing from last year's payment of the same period to €0.14 on 26th of June. This makes the dividend yield about the same as the industry average at 4.4%.

Check out our latest analysis for Hera

Hera's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Hera'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.

Over the next year, EPS is forecast to fall by 6.1%. If the dividend continues along recent trends, we estimate the payout ratio could be 51%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Hera Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was €0.09, compared to the most recent full-year payment of €0.14. This implies that the company grew its distributions at a yearly rate of about 4.5% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

We Could See Hera's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Hera has grown earnings per share at 9.7% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Hera Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Hera is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Hera has 2 warning signs (and 1 which is potentially serious) we think you should know about. Is Hera 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.