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Coca-Cola Europacific Partners PLC's (AMS:CCEP) investors are due to receive a payment of €0.79 per share on 27th of May. This makes the dividend yield about the same as the industry average at 2.5%.
Our free stock report includes 2 warning signs investors should be aware of before investing in Coca-Cola Europacific Partners. Read for free now.
Coca-Cola Europacific Partners' Projected Earnings Seem Likely To Cover Future Distributions
We aren't too impressed by dividend yields unless they can be sustained over time. The last dividend was quite easily covered by Coca-Cola Europacific Partners' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 56.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 46% by next year, which is in a pretty sustainable range.
See our latest analysis for Coca-Cola Europacific Partners
Coca-Cola Europacific Partners' Dividend Has Lacked Consistency
Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. Since 2016, the dividend has gone from €0.68 total annually to €1.97. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. Coca-Cola Europacific Partners has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
Coca-Cola Europacific Partners Could Grow Its Dividend
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. It's encouraging to see that Coca-Cola Europacific Partners has been growing its earnings per share at 5.7% 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.
Our Thoughts On Coca-Cola Europacific Partners' Dividend
Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.