Gielda Papierów Wartosciowych w Warszawie (WSE:GPW) Is Increasing Its Dividend To zł2.74

The board of Gielda Papierów Wartosciowych w Warszawie S.A. (WSE:GPW) has announced that the dividend on 5th of August will be increased to zł2.74, which will be 9.6% higher than last year. This makes the dividend yield about the same as the industry average at 7.2%.

Check out our latest analysis for Gielda Papierów Wartosciowych w Warszawie

Gielda Papierów Wartosciowych w Warszawie's Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. The last payment was quite easily covered by earnings, but it made up 1,079% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

EPS is set to fall by 1.1% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 74%, which is comfortable for the company to continue in the future.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from zł3.21 in 2012 to the most recent annual payment of zł2.50. The dividend has shrunk at around 2.5% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Gielda Papierów Wartosciowych w Warszawie May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. However, Gielda Papierów Wartosciowych w Warszawie has only grown its earnings per share at 4.2% per annum over the past five years. Growth of 4.2% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Gielda Papierów Wartosciowych w Warszawie's payments are rock solid. While Gielda Papierów Wartosciowych w Warszawie is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

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 example, we've identified 2 warning signs for Gielda Papierów Wartosciowych w Warszawie (1 is potentially serious!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.