Asseco Poland's (WSE:ACP) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Asseco Poland S.A. (WSE:ACP) has announced that it will be increasing its dividend by 8.0% on the 21st of June to zł3.36. This takes the annual payment to 4.3% of the current stock price, which is about average for the industry.

See our latest analysis for Asseco Poland

Asseco Poland's Earnings Easily Cover the Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last dividend was quite easily covered by Asseco Poland's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to fall by 7.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 65%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Asseco Poland Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from zł1.80 in 2012 to the most recent annual payment of zł3.11. This works out to be a compound annual growth rate (CAGR) of approximately 5.6% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Asseco Poland Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Asseco Poland has been growing its earnings per share at 9.2% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Asseco Poland 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. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Asseco Poland that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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