Stock Analysis

Cyfrowy Polsat (WSE:CPS) Is Paying Out A Dividend Of PLN1.20

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Cyfrowy Polsat S.A. (WSE:CPS) has announced that it will pay a dividend of PLN1.20 per share on the 15th of December. This means the dividend yield will be fairly typical at 6.2%.

Check out our latest analysis for Cyfrowy Polsat

Cyfrowy Polsat's Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, based ont he last payment, Cyfrowy Polsat was earning enough to cover the dividend pretty comfortably. The business is earning enough to make the dividend feasible, but the cash payout ratio of 91% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.

Looking forward, earnings per share is forecast to fall by 71.6% over the next year. However, if the dividend continues along recent trends, we estimate the payout ratio could reach 81%, meaning that most of the company's earnings are being paid out to shareholders.

WSE:CPS Historic Dividend September 4th 2022

Cyfrowy Polsat's Dividend Has Lacked Consistency

Cyfrowy Polsat has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The dividend has gone from an annual total of PLN0.32 in 2017 to the most recent total annual payment of PLN1.20. This works out to be a compound annual growth rate (CAGR) of approximately 30% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Cyfrowy Polsat has impressed us by growing EPS at 27% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Cyfrowy Polsat's payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 4 warning signs for Cyfrowy Polsat (of which 2 shouldn't be ignored!) you should know about. Is Cyfrowy Polsat not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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Cyfrowy Polsat

Cyfrowy Polsat S.A. provides digital satellite platform and terrestrial television (TV), and telecommunication services in Poland.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Future Growth3
Past Performance2
Financial Health2

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with moderate growth potential.