The board of Piquadro S.p.A. (BIT:PQ) has announced a 42% increase in its dividend on August 7th to €0.1483, up from last year’s payment of €0.104. This brings the dividend yield to 4.8%, which shareholders will appreciate.
It is important to note that while the dividend yield is strong, it is crucial for the payment to be sustainable. The last dividend was well covered by Piquadro’s earnings, indicating that a significant portion of earnings are being reinvested in the business.
However, there are concerns about the future sustainability of the dividend. EPS is expected to decline by 20.2% over the next year, which could result in a payout ratio of 96%. This could put pressure on the dividend if earnings do not improve.
Piquadro has a history of dividend volatility, with at least one cut in the past decade. While the dividend has shown rapid growth over the years, there have also been instances of payment decreases, raising caution.
With declining earnings per share over the last five years, the potential for future dividend growth is uncertain. While the company is generating adequate cash flow to sustain the dividend for now, the overall track record is not strong.
In conclusion, while it is positive to see a dividend increase, Piquadro may not be a reliable income stock. Investors should consider the company’s inconsistent dividend history and declining earnings before making investment decisions.