Why Income Investors Should Have Axel Springer SE (FRA:SPR) In Their Portfolio
If you are an income investor, then Axel Springer SE (FRA:SPR) should be on your radar. Axel Springer SE operates as a publishing company primarily in Europe and the United States. Over the past 10 years, the €5.5b market cap company has been growing its dividend payments, from €1.33 to €2. Currently yielding 4.0%, let’s take a closer look at Axel Springer’s dividend profile.
See our latest analysis for Axel Springer
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
Its annual yield is among the top 25% of dividend payers
It consistently pays out dividend without missing a payment or significantly cutting payout
Its has increased its dividend per share amount over the past
It is able to pay the current rate of dividends from its earnings
It has the ability to keep paying its dividends going forward
High Yield And Dependable
Axel Springer’s yield sits at 4.0%, which is on the low-side for Media stocks. But the real reason Axel Springer stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. SPR has increased its DPS from €1.33 to €2 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
The current trailing twelve-month payout ratio for the stock is 50%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SPR’s payout to increase to 69% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.5%. However, EPS is forecasted to fall to €2.86 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
Next Steps:
Investors of Axel Springer can continue to expect strong dividends from the stock. With its favorable dividend characteristics, if high income generation is still the goal for your portfolio, then Axel Springer is one worth keeping around. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three essential factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for SPR’s future growth? Take a look at our free research report of analyst consensus for SPR’s outlook.
Valuation: What is SPR 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 SPR is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better 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.
