Petrol d.d (LJSE:PETG) Will Pay A Larger Dividend Than Last Year At €2.10

The board of Petrol d.d. (LJSE:PETG) has announced that it will be increasing its dividend by 17% on the 1st of August to €2.10, up from last year's comparable payment of €1.80. This will take the annual payment to 4.4% of the stock price, which is above what most companies in the industry pay.

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Petrol d.d's Projected Earnings Seem Likely To Cover Future Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Petrol d.d's earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 6.3% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 66% by next year, which is in a pretty sustainable range.

See our latest analysis for Petrol d.d

Petrol d.d Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from €0.505 total annually to €1.80. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. 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.

We Could See Petrol d.d's Dividend Growing

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 Petrol d.d has been growing its earnings per share at 6.3% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Petrol d.d's Dividend

Overall, a dividend increase is always good, and we think that Petrol d.d is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on Petrol d.d management tenure, salary, and performance. 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.