Is B.V. Delftsch Aardewerkfabriek "De Porceleyne Fles Anno 1653"'s (AMS:PORF) 6.2% Dividend Worth Your Time?

Dividend paying stocks like B.V. Delftsch Aardewerkfabriek "De Porceleyne Fles Anno 1653" (AMS:PORF) tend to be popular with investors, and for good reason - some research suggests a significant amount of all stock market returns come from reinvested dividends. If you are hoping to live on the income from dividends, it's important to be a lot more stringent with your investments than the average punter.

B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 pays a 6.2% dividend yield, and has been paying dividends for the past two years. It's certainly an attractive yield, but readers are likely curious about its staying power. Some simple analysis can offer a lot of insights when buying a company for its dividend, and we'll go through this below.

Explore this interactive chart for our latest analysis on B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653!

Payout ratios

Companies (usually) pay dividends out of their earnings. If a company is paying more than it earns, the dividend might have to be cut. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. Looking at the data, we can see that 68% of B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's profits were paid out as dividends in the last 12 months. This is a healthy payout ratio, and while it does limit the amount of earnings that can be reinvested in the business, there is also some room to lift the payout ratio over time.

Remember, you can always get a snapshot of B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's latest financial position, by checking our visualisation of its financial health.

Dividend Volatility

One of the major risks of relying on dividend income, is the potential for a company to struggle financially and cut its dividend. Not only is your income cut, but the value of your investment declines as well - nasty. The dividend has not fluctuated much, but with a relatively short payment history, we can't be sure this is sustainable across a full market cycle. During the past two-year period, the first annual payment was €0.5 in 2019, compared to €0.6 last year. Dividends per share have grown at approximately 4.9% per year over this time.

We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

Dividend Growth Potential

Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. Strong earnings per share (EPS) growth might encourage our interest in the company despite fluctuating dividends, which is why it's great to see B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has grown its earnings per share at 33% per annum over the past five years. With recent, rapid earnings per share growth and a payout ratio of 68%, this business looks like an interesting prospect if earnings are reinvested effectively.

We'd also point out that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 issued a meaningful number of new shares in the past year. Regularly issuing new shares can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Conclusion

To summarise, shareholders should always check that B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's dividends are affordable, that its dividend payments are relatively stable, and that it has decent prospects for growing its earnings and dividend. B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653's payout ratio is within an average range for most market participants. Next, earnings growth has been good, but unfortunately the company has not been paying dividends as long as we'd like. While we're not hugely bearish on it, overall we think there are potentially better dividend stocks than B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 out there.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, B.V. Delftsch Aardewerkfabriek De Porceleyne Fles Anno 1653 has 4 warning signs (and 1 which is a bit concerning) we think you should know about.

Looking for more high-yielding dividend ideas? Try our curated list of dividend stocks with a yield above 3%.

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This article by Simply Wall St is general in nature. 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.
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