Robinson Europe's (WSE:RBS) Upcoming Dividend Will Be Larger Than Last Year's

Robinson Europe S.A. (WSE:RBS) will increase its dividend from last year's comparable payment on the 1st of July to PLN0.07. This will take the dividend yield to an attractive 2.1%, providing a nice boost to shareholder returns.

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Robinson Europe's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Robinson Europe's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS could expand by 144.0% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 10% by next year, which is in a pretty sustainable range.

View our latest analysis for Robinson Europe

Robinson Europe's Dividend Has Lacked Consistency

Looking back, Robinson Europe's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 8 years was PLN0.05 in 2017, and the most recent fiscal year payment was PLN0.07. This means that it has been growing its distributions at 4.3% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Robinson Europe has grown earnings per share at 144% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Robinson Europe Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for Robinson Europe (2 are a bit concerning!) that you should be aware of before investing. Is Robinson Europe not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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