Coca-Cola Europacific Partners (AMS:CCEP) Will Pay A Larger Dividend Than Last Year At €1.23

Coca-Cola Europacific Partners PLC (AMS:CCEP) will increase its dividend on the 3rd of December to €1.23, which is 5.1% higher than last year's payment from the same period of €1.17. This takes the annual payment to 2.7% of the current stock price, which is about average for the industry.

See our latest analysis for Coca-Cola Europacific Partners

Coca-Cola Europacific Partners' Payment Could Potentially Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. The last dividend was quite easily covered by Coca-Cola Europacific Partners' 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 rise by 42.6% over the next year. If the dividend continues on this path, the payout ratio could be 44% by next year, which we think can be pretty sustainable going forward.

Coca-Cola Europacific Partners' Dividend Has Lacked Consistency

Looking back, Coca-Cola Europacific Partners' dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of €0.68 in 2016 to the most recent total annual payment of €1.91. This means that it has been growing its distributions at 14% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Coca-Cola Europacific Partners has been growing its earnings per share at 11% a 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.

Coca-Cola Europacific Partners Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For instance, we've picked out 3 warning signs for Coca-Cola Europacific Partners that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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