S.N. Nuclearelectrica's (BVB:SNN) Shareholders Will Receive A Smaller Dividend Than Last Year

S.N. Nuclearelectrica S.A. (BVB:SNN) has announced it will be reducing its dividend payable on the 24th of June to RON2.7, which is 27% lower than what investors received last year for the same period. The yield is still above the industry average at 9.2%.

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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 only 56% of earnings, however it was paying out 115% of free cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Over the next year, EPS is forecast to fall by 38.6%. However, if the dividend continues along recent trends, we estimate the payout ratio could reach 82%, meaning that most of the company's earnings are being paid out to shareholders.

See our latest analysis for S.N. Nuclearelectrica

S.N. Nuclearelectrica Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of RON0.30 in 2015 to the most recent total annual payment of RON3.72. This means that it has been growing its distributions at 29% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

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.

Our Thoughts On S.N. Nuclearelectrica's Dividend

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While S.N. Nuclearelectrica is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 identified 2 warning signs for S.N. Nuclearelectrica (1 is concerning!) 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.