Should Aegean Airlines S.A. (ATH:AEGN) Be Part Of Your Dividend Portfolio?
Aegean Airlines S.A. (ATH:AEGN) has pleased shareholders over the past 10 years, by paying out dividends. The stock currently pays out a dividend yield of 7.3%, and has a market cap of €541m. Does Aegean Airlines tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
See our latest analysis for Aegean Airlines
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5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it paying an annual yield above 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Aegean Airlines pass our checks?
Aegean Airlines has a trailing twelve-month payout ratio of 59%, which means that the dividend is covered by earnings. However, going forward, analysts expect AEGN’s payout to fall to 53% of its earnings. Assuming a constant share price, this equates to a dividend yield of 6.6%. Moreover, EPS is also forecasted to fall to €0.88 in the upcoming year. The lower EPS on top of a lower payout ratio will lead to a fall in dividend payment moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although AEGN’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Relative to peers, Aegean Airlines produces a yield of 7.3%, which is high for Airlines stocks.
Next Steps:
Keeping in mind the dividend characteristics above, Aegean Airlines is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three essential aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for AEGN’s future growth? Take a look at our free research report of analyst consensus for AEGN’s outlook.
Valuation: What is AEGN worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether AEGN is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
