Traton SE (ETR:8TRA) has announced that it will be paying a dividend of €1.50 on June 18th, an increase from last year’s dividend. This will bring the dividend yield to 4.4%, providing a nice boost to shareholder returns.
While dividend yield is important for income investors, it is also crucial to consider any significant share price movements, as these can outweigh gains from distributions. Traton’s stock price has risen by 48% in the last 3 months, which is positive for shareholders but can also impact the dividend yield.
Traton’s dividend payment is supported by solid earnings coverage. While the company paid out a large portion of cash flows in the last payment, the earnings per share is expected to increase by 13.1% over the next year. This could result in a more sustainable payout ratio of 28% by next year.
Although the dividend history of Traton has been inconsistent, with annual payments increasing at 11% per annum over the last 4 years, the company has shown strong growth in earnings per share at 17% per year over the past five years. This indicates potential for future dividend growth.
In summary, while Traton is currently raising its dividend, it may not be the best income stock due to concerns about cash flows. Investors should be cautious about relying solely on this stock for dividend income. It is important to consider other factors when analyzing stock performance.