VERBIO Vereinigte BioEnergie (ETR:VBK) Has Announced A Dividend Of €0.20
The board of VERBIO Vereinigte BioEnergie AG (ETR:VBK) has announced that it will pay a dividend of €0.20 per share on the 7th of February. The dividend yield is 0.7% based on this payment, which is a little bit low compared to the other companies in the industry.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. VERBIO Vereinigte BioEnergie's stock price has reduced by 31% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.
See our latest analysis for VERBIO Vereinigte BioEnergie
VERBIO Vereinigte BioEnergie's Dividend Is Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, VERBIO Vereinigte BioEnergie was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
Over the next year, EPS is forecast to expand by 165.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 6.8%, which is in the range that makes us comfortable with the sustainability of the dividend.
VERBIO Vereinigte BioEnergie Doesn't Have A Long Payment History
The dividend's track record has been pretty solid, but with only 8 years of history we want to see a few more years of history before making any solid conclusions. Since 2015, the annual payment back then was €0.10, compared to the most recent full-year payment of €0.20. This works out to be a compound annual growth rate (CAGR) of approximately 9.1% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider VERBIO Vereinigte BioEnergie to be a consistent dividend paying 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 VERBIO Vereinigte BioEnergie has been growing its earnings per share at 38% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for VERBIO Vereinigte BioEnergie you should be aware of, and 1 of them is a bit unpleasant. Is VERBIO Vereinigte BioEnergie not quite the opportunity you were looking for? Why not check out our selection of top 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.
