NEUCA (WSE:NEU) Is Increasing Its Dividend To zł11.50

The board of NEUCA S.A. (WSE:NEU) has announced that the dividend on 17th of May will be increased to zł11.50, which will be 15% higher than last year. The announced payment will take the dividend yield to 1.4%, which is in line with the average for the industry.

See our latest analysis for NEUCA

NEUCA's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, NEUCA's earnings easily 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 24.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

NEUCA Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was zł2.60 in 2012, and the most recent fiscal year payment was zł10.00. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See NEUCA's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. NEUCA has seen EPS rising for the last five years, at 5.8% per annum. NEUCA definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like NEUCA's Dividend

Overall, a dividend increase is always good, and we think that NEUCA is a strong income stock thanks to its track record and growing earnings. 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 of these factors considered, we think this has solid potential as a dividend stock.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for NEUCA for free with public analyst estimates for the company. Is NEUCA not quite the opportunity you were looking for? Why not check out our selection of top 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.