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F.I.L.A. - Fabbrica Italiana Lapis ed Affini (BIT:FILA) Is Increasing Its Dividend To €0.40

Simply Wall St · 04/09/2025 12:34

The board of F.I.L.A. - Fabbrica Italiana Lapis ed Affini S.p.A. (BIT:FILA) has announced that it will be increasing its dividend by 233% on the 21st of May to €0.40, up from last year's comparable payment of €0.12. Although the dividend is now higher, the yield is only 1.2%, which is below the industry average.

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F.I.L.A. - Fabbrica Italiana Lapis ed Affini's Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, F.I.L.A. - Fabbrica Italiana Lapis ed Affini 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.

EPS is set to fall by 37.6% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 45%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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BIT:FILA Historic Dividend April 9th 2025

Check out our latest analysis for F.I.L.A. - Fabbrica Italiana Lapis ed Affini

F.I.L.A. - Fabbrica Italiana Lapis ed Affini's Dividend Has Lacked Consistency

Looking back, F.I.L.A. - Fabbrica Italiana Lapis ed Affini's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2016, the dividend has gone from €0.09 total annually to €0.12. This means that it has been growing its distributions at 3.2% per annum over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

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. We are encouraged to see that F.I.L.A. - Fabbrica Italiana Lapis ed Affini has grown earnings per share at 28% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that F.I.L.A. - Fabbrica Italiana Lapis ed Affini could prove to be a strong dividend payer.

We Really Like F.I.L.A. - Fabbrica Italiana Lapis ed Affini's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for F.I.L.A. - Fabbrica Italiana Lapis ed Affini (of which 1 is a bit unpleasant!) you should know about. Is F.I.L.A. - Fabbrica Italiana Lapis ed Affini not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.