Koninklijke Vopak (AMS:VPK) Will Pay A Larger Dividend Than Last Year At €1.60

Koninklijke Vopak N.V. (AMS:VPK) has announced that it will be increasing its dividend from last year's comparable payment on the 2nd of May to €1.60. This takes the annual payment to 4.0% of the current stock price, which unfortunately is below what the industry is paying.

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Koninklijke Vopak's Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Koninklijke Vopak's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 61.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

See our latest analysis for Koninklijke Vopak

Koninklijke Vopak Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was €0.90, compared to the most recent full-year payment of €1.60. This works out to be a compound annual growth rate (CAGR) of approximately 5.9% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth Is Doubtful

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. In the last five years, Koninklijke Vopak's earnings per share has shrunk at approximately 6.4% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

Our Thoughts On Koninklijke Vopak's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. 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.

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. Taking the debate a bit further, we've identified 1 warning sign for Koninklijke Vopak that investors need to be conscious of moving forward. Is Koninklijke Vopak not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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