Gielda Papierów Wartosciowych w Warszawie (WSE:GPW) Is Increasing Its Dividend To PLN3.15

The board of Gielda Papierów Wartosciowych w Warszawie S.A. (WSE:GPW) has announced that the dividend on 6th of August will be increased to PLN3.15, which will be 5.0% higher than last year's payment of PLN3.00 which covered the same period. This takes the annual payment to 6.3% of the current stock price, which unfortunately is below what the industry is paying.

Our free stock report includes 1 warning sign investors should be aware of before investing in Gielda Papierów Wartosciowych w Warszawie. Read for free now.

Gielda Papierów Wartosciowych w Warszawie's Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. At the time of the last dividend payment, Gielda Papierów Wartosciowych w Warszawie was paying out a very large proportion of what it was earning and 138% of cash flows. Paying out such a high proportion of cash flows certainly exposes the company to cutting the dividend if cash flows were to reduce.

Over the next year, EPS is forecast to expand by 24.2%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 74% which brings it into quite a comfortable range.

Check out our latest analysis for Gielda Papierów Wartosciowych w Warszawie

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was PLN1.20 in 2015, and the most recent fiscal year payment was PLN3.00. This works out to be a compound annual growth rate (CAGR) of approximately 9.6% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings has been rising at 4.5% per annum over the last five years, which admittedly is a bit slow. Gielda Papierów Wartosciowych w Warszawie's earnings per share has barely grown, which is not ideal - perhaps this is why the company pays out the majority of its earnings to shareholders. This isn't the end of the world, but for investors looking for strong dividend growth they may want to look elsewhere.

The Dividend Could Prove To Be Unreliable

Overall, we always like to see the dividend being raised, but we don't think Gielda Papierów Wartosciowych w Warszawie will make a great income stock. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 Gielda Papierów Wartosciowych w Warszawie that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.