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

Asseco Poland S.A. (WSE:ACP) has announced that it will be increasing its dividend from last year's comparable payment on the 28th of June to PLN3.50. This takes the annual payment to 4.2% of the current stock price, which is about average for the industry.

Check out our latest analysis for Asseco Poland

Asseco Poland'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. Based on the last payment, Asseco Poland was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 3.1%. If the dividend continues on this path, the payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.

Asseco Poland Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was PLN2.41, compared to the most recent full-year payment of PLN3.50. This implies that the company grew its distributions at a yearly rate of about 3.8% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately, Asseco Poland's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. Growth of 1.2% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like Asseco Poland's Dividend

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. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 Asseco Poland analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Asseco Poland not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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