SALUS Ljubljana d. d (LJSE:SALR) Has Announced A Dividend Of €35.00

The board of SALUS, Ljubljana, d. d. (LJSE:SALR) has announced that it will pay a dividend on the 28th of April, with investors receiving €35.00 per share. This makes the dividend yield 4.9%, which will augment investor returns quite nicely.

View our latest analysis for SALUS Ljubljana d. d

SALUS Ljubljana d. d's Payment Has Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, SALUS Ljubljana d. d was quite comfortably covering its dividend with earnings and it was paying more than 75% of its free cash flow to shareholders. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

Looking forward, earnings per share could rise by 26.9% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 50%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of €40.00 in 2013 to the most recent total annual payment of €70.00. This implies that the company grew its distributions at a yearly rate of about 5.8% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

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 SALUS Ljubljana d. d has grown earnings per share at 27% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that SALUS Ljubljana d. d could prove to be a strong dividend payer.

Our Thoughts On SALUS Ljubljana d. d's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about SALUS Ljubljana d. d's payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for SALUS Ljubljana d. d you should be aware of, and 1 of them doesn't sit too well with us. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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