BRD - Groupe Société Générale (BVB:BRD) Has Announced That It Will Be Increasing Its Dividend To RON1.29

BRD - Groupe Société Générale S.A.'s (BVB:BRD) dividend will be increasing to RON1.29 on 7th of June. This makes the dividend yield 22%, which is above the industry average.

View our latest analysis for BRD - Groupe Société Générale

BRD - Groupe Société Générale Is Paying Out More Than It Is Earning

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, BRD - Groupe Société Générale was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to fall by 1.9%. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 195%, which is definitely a bit high to be sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2012, the first annual payment was RON0.17, compared to the most recent full-year payment of RON1.29. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. BRD - Groupe Société Générale has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. BRD - Groupe Société Générale has seen EPS rising for the last five years, at 12% per annum. BRD - Groupe Société Générale definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. As an example, we've identified 2 warning signs for BRD - Groupe Société Générale that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.