Stock Analysis

SNGN Romgaz (BVB:SNG) Has Announced That Its Dividend Will Be Reduced To RON0.4986

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SNGN Romgaz SA's (BVB:SNG) dividend is being reduced by 85% to RON0.4986 per share on 26th of July, in comparison to last year's comparable payment of RON3.42. The dividend yield will be in the average range for the industry at 6.6%.

See our latest analysis for SNGN Romgaz

SNGN Romgaz's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last payment, SNGN Romgaz was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 38.9%. If the dividend continues along recent trends, we estimate the payout ratio could be 11%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

BVB:SNG Historic Dividend April 27th 2024

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was RON2.60, compared to the most recent full-year payment of RON3.42. This works out to be a compound annual growth rate (CAGR) of approximately 2.8% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. SNGN Romgaz has seen EPS rising for the last five years, at 16% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

SNGN Romgaz Looks Like A Great Dividend Stock

In general, we don't like to see the dividend being cut, especially when the company has such high potential like SNGN Romgaz does. By reducing the dividend, pressure will be taken off the balance sheet, which could help the dividend to be consistent in the future. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 example, we've picked out 1 warning sign for SNGN Romgaz that investors should know about before committing capital to this stock. Is SNGN Romgaz not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.