Cenergy Holdings' (EBR:CENER) Upcoming Dividend Will Be Larger Than Last Year's

Cenergy Holdings SA (EBR:CENER) has announced that it will be increasing its dividend from last year's comparable payment on the 26th of June to €0.098. The payment will take the dividend yield to 1.6%, which is in line with the average for the industry.

Our free stock report includes 1 warning sign investors should be aware of before investing in Cenergy Holdings. Read for free now.

Cenergy Holdings' Future Dividend Projections Appear Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, prior to this announcement, Cenergy Holdings' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 51.4%. If the dividend continues on this path, the payout ratio could be 9.9% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Cenergy Holdings

Cenergy Holdings Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of €0.05 in 2023 to the most recent total annual payment of €0.14. This implies that the company grew its distributions at a yearly rate of about 67% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Cenergy Holdings has been growing its earnings per share at 44% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

An additional note is that the company has been raising capital by issuing stock equal to 12% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like Cenergy Holdings' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Cenergy Holdings that investors should know about before committing capital to this stock. Is Cenergy Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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