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

NEUCA S.A.'s (WSE:NEU) dividend will be increasing to zł11.50 on 17th of May. Based on the announced payment, the dividend yield for the company will be 1.4%, which is fairly typical for the industry.

View our latest analysis for NEUCA

NEUCA's Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, NEUCA's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 24.0%. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

NEUCA Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the first annual payment was zł2.60, compared to the most recent full-year payment of zł11.50. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. NEUCA has seen EPS rising for the last five years, at 5.9% 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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 NEUCA analysts we track are forecasting continued growth with our free report on 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.