Berentzen-Gruppe (ETR:BEZ) Has Announced That It Will Be Increasing Its Dividend To €0.11

Berentzen-Gruppe Aktiengesellschaft's (ETR:BEZ) dividend will be increasing from last year's payment of the same period to €0.11 on 28th of May. Even though the dividend went up, the yield is still quite low at only 2.4%.

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Berentzen-Gruppe's Long-term Dividend Outlook appears Promising

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Berentzen-Gruppe is unprofitable despite paying a dividend, and it is paying out 189% of its free cash flow. This is quite a strong warning sign that the dividend may not be sustainable.

Analysts expect a massive rise in earnings per share in the next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 31%, which makes us pretty comfortable with the sustainability of the dividend.

Check out our latest analysis for Berentzen-Gruppe

Berentzen-Gruppe's Dividend Has Lacked Consistency

Berentzen-Gruppe has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. Since 2016, the annual payment back then was €0.20, compared to the most recent full-year payment of €0.11. Doing the maths, this is a decline of about 6.4% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Limited Growth Potential

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Earnings per share has been sinking by 43% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

We're Not Big Fans Of Berentzen-Gruppe's Dividend

In conclusion, we have some concerns about this dividend, even though it being raised is good. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 2 warning signs for Berentzen-Gruppe you should be aware of, and 1 of them shouldn't be ignored. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.