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Eni's (BIT:ENI) Upcoming Dividend Will Be Larger Than Last Year's

Simply Wall St · 06/23 12:32

The board of Eni S.p.A. (BIT:ENI) has announced that it will be paying its dividend of €0.26 on the 24th of September, an increased payment from last year's comparable dividend. The payment will take the dividend yield to 7.3%, which is in line with the average for the industry.

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Eni's Payment Could Potentially Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, the company was paying out 96% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 59%. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

The next year is set to see EPS grow by 130.9%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 52% which would be quite comfortable going to take the dividend forward.

historic-dividend
BIT:ENI Historic Dividend June 23rd 2025

Check out our latest analysis for Eni

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was €1.12 in 2015, and the most recent fiscal year payment was €1.05. The dividend has shrunk at a rate of less than 1% a year over this period. A company that decreases its dividend over time generally isn't what we are looking for.

Eni Might Find It Hard To Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Eni has grown earnings per share at 36% per year over the past five years. EPS has been growing well, but Eni has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Eni will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Eni that you should be aware of before investing. Is Eni not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.