S.N. Nuclearelectrica's (BVB:SNN) Dividend Is Being Reduced To RON2.7

The board of S.N. Nuclearelectrica S.A. (BVB:SNN) has announced it will be reducing its dividend by 27% from last year's payment of RON3.72 on the 24th of June, with shareholders receiving RON2.7. The dividend yield of 9.5% is still a nice boost to shareholder returns, despite the cut.

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S.N. Nuclearelectrica's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, S.N. Nuclearelectrica's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

EPS is set to fall by 38.6% over the next 12 months. If recent patterns in the dividend continue, we could see the payout ratio reaching 82% in the next 12 months, which is on the higher end of the range we would say is sustainable.

See our latest analysis for S.N. Nuclearelectrica

S.N. Nuclearelectrica 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. Since 2015, the dividend has gone from RON0.30 total annually to RON3.72. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that S.N. Nuclearelectrica has been growing its earnings per share at 31% a year over the past five years. S.N. Nuclearelectrica is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

S.N. Nuclearelectrica Looks Like A Great Dividend Stock

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 S.N. Nuclearelectrica 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 S.N. Nuclearelectrica that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.