In This Article:
The board of secunet Security Networks Aktiengesellschaft (ETR:YSN) has announced that it will be paying its dividend of €2.73 on the 2nd of June, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 1.5%.
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. Investors will be pleased to see that secunet Security Networks' stock price has increased by 66% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
secunet Security Networks' Payment Could Potentially Have Solid Earnings Coverage
Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, secunet Security Networks was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 38.1%. If the dividend continues on this path, the payout ratio could be 55% by next year, which we think can be pretty sustainable going forward.
See our latest analysis for secunet Security Networks
secunet Security Networks Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of €0.27 in 2015 to the most recent total annual payment of €2.73. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
Dividend Growth May Be Hard To Achieve
Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 4.6% a year for the past five years, which isn't massive but still better than seeing them shrink. Growth of 4.6% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
secunet Security Networks Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.