VRG (WSE:VRG) Has Announced That Its Dividend Will Be Reduced To PLN0.09

VRG S.A. (WSE:VRG) has announced that on 16th of December, it will be paying a dividend ofPLN0.09, which a reduction from last year's comparable dividend. However, the dividend yield of 2.4% still remains in a typical range for the industry.

See our latest analysis for VRG

VRG's Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, VRG was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 1.1% over the next year. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

VRG's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. Since 2022, the annual payment back then was PLN0.17, compared to the most recent full-year payment of PLN0.09. Dividend payments have fallen sharply, down 47% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. VRG has seen EPS rising for the last five years, at 11% per annum. VRG definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like VRG's Dividend

In general, we don't like to see the dividend being cut, especially when the company has such high potential like VRG does. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in VRG stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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