AMG Advanced Metallurgical Group (AMS:AMG) Is Increasing Its Dividend To $0.40

AMG Advanced Metallurgical Group N.V. (AMS:AMG) will increase its dividend from last year's comparable payment on the 11th of May to $0.40. Although the dividend is now higher, the yield is only 2.1%, which is below the industry average.

Check out our latest analysis for AMG Advanced Metallurgical Group

AMG Advanced Metallurgical Group's Earnings Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, AMG Advanced Metallurgical Group was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 26.4% over the next year. If the dividend continues on this path, the payout ratio could be 9.0% by next year, which we think can be pretty sustainable going forward.

AMG Advanced Metallurgical Group's Dividend Has Lacked Consistency

AMG Advanced Metallurgical Group has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the dividend has gone from $0.217 total annually to $0.861. This means that it has been growing its distributions at 19% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. AMG Advanced Metallurgical Group has seen EPS rising for the last five years, at 27% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

AMG Advanced Metallurgical Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that AMG Advanced Metallurgical Group is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 3 warning signs for AMG Advanced Metallurgical Group that investors should take into consideration. Is AMG Advanced Metallurgical Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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