Why Caisse Regionale de Credit Agricole Mutuel Toulouse 31 (EPA:CAT31) Should Be In Your Dividend Portfolio

Simply Wall St

Tue, May 28, 2019, 3:39 AM

Could Caisse Regionale de Credit Agricole Mutuel Toulouse 31 (EPA:CAT31) be an attractive dividend share to own for the long haul? Investors are often drawn to strong companies with the idea of reinvesting the dividends. Unfortunately, it's common for investors to be enticed in by the seemingly attractive yield, and lose money when the company has to cut its dividend payments.

In this case, Caisse Regionale de Credit Agricole Mutuel Toulouse 31 likely looks attractive to investors, given its 3.5% dividend yield and a payment history of over ten years. We'd guess that plenty of investors have purchased it for the income. Before you buy any stock for its dividend however, you should always remember Warren Buffett's two rules: 1) Don't lose money, and 2) Remember rule #1. We'll run through some checks below to help with this.

Explore this interactive chart for our latest analysis on Caisse Regionale de Credit Agricole Mutuel Toulouse 31!

ENXTPA:CAT31 Historical Dividend Yield, May 28th 2019

Payout ratios

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. As a result, we should always investigate whether a company can afford its dividend, measured as a percentage of a company's net income after tax. Caisse Regionale de Credit Agricole Mutuel Toulouse 31 paid out 37% of its profit as dividends, over the trailing twelve month period. This is a middling range that strikes a nice balance between paying dividends to shareholders, and retaining enough earnings to invest in future growth. Plus, there is room to increase the payout ratio over time.

Consider getting our latest analysis on Caisse Regionale de Credit Agricole Mutuel Toulouse 31's financial position here.

Dividend Volatility

From the perspective of an income investor who wants to earn dividends for many years, there is not much point buying a stock if its dividend is regularly cut or is not reliable. For the purpose of this article, we only scrutinise the last decade of Caisse Regionale de Credit Agricole Mutuel Toulouse 31's dividend payments. The dividend has been stable over the past 10 years, which is great. We think this could suggest some resilience to the business and its dividends. During the past ten-year period, the first annual payment was €3.26 in 2009, compared to €4.54 last year. This works out to be a compound annual growth rate (CAGR) of approximately 3.4% a year over that time.

Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think is seriously impressive.

Dividend Growth Potential

Dividend payments have been consistent over the past few years, but we should always check if earnings per share (EPS) are growing, as this will help maintain the purchasing power of the dividend. Caisse Regionale de Credit Agricole Mutuel Toulouse 31's EPS are effectively flat over the past five years. Over the long term, steady earnings per share is a risk as the value of the dividends can be reduced by inflation. A payout ratio below 50% leaves ample room to reinvest in the business, and provides finanical flexibility. Earnings per share growth have grown slowly, which is not great, but if the retained earnings can be reinvested effectively, future growth may be stronger.

Conclusion

Dividend investors should always want to know if a) a company's dividends are affordable, b) if there is a track record of consistent payments, and c) if the dividend is capable of growing. Firstly, we like that Caisse Regionale de Credit Agricole Mutuel Toulouse 31 has a low and conservative payout ratio. Earnings growth has been limited, but we like that the dividend payments have been fairly consistent. Overall we think Caisse Regionale de Credit Agricole Mutuel Toulouse 31 is an interesting dividend stock, although it could be better.

Now, if you want to look closer, it would be worth checking out our free research on Caisse Regionale de Credit Agricole Mutuel Toulouse 31 management tenure, salary, and performance.

Looking for more high-yielding dividend ideas? Try our curated list of dividend stocks with a yield above 3%.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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