Stock Analysis

SNGN Romgaz's (BVB:SNG) Dividend Is Being Reduced To RON3.42

BVB:SNG
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SNGN Romgaz SA's (BVB:SNG) dividend is being reduced from last year's payment covering the same period to RON3.42 on the 27th of July. Despite the cut, the dividend yield of 8.2% will still be comparable to other companies in the industry.

Check out our latest analysis for SNGN Romgaz

SNGN Romgaz's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, SNGN Romgaz's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

EPS is set to fall by 8.3% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 57%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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BVB:SNG Historic Dividend June 24th 2023

SNGN Romgaz's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. The annual payment during the last 9 years was RON2.60 in 2014, and the most recent fiscal year payment was RON3.42. This works out to be a compound annual growth rate (CAGR) of approximately 3.1% a year over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

We Could See SNGN Romgaz's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that SNGN Romgaz has grown earnings per share at 8.3% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like SNGN Romgaz's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that SNGN Romgaz has the makings of a solid income stock moving forward. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for SNGN Romgaz (of which 1 is a bit unpleasant!) you should know about. 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.