Yahoo Finance Hapag-Lloyd's (ETR:HLAG) Dividend Is Being Reduced To €9.25
Hapag-Lloyd Aktiengesellschaft's (ETR:HLAG) dividend is being reduced from last year's payment covering the same period to €9.25 on the 6th of May. This means that the annual payment is 5.4% of the current stock price, which is lower than what the rest of the industry is paying.
View our latest analysis for Hapag-Lloyd
Hapag-Lloyd Is Paying Out More Than It Is Earning
If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Hapag-Lloyd's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Over the next year, EPS is forecast to fall by 76.4%. If the dividend continues along the path it has been on recently, the company could be paying out more than double what it is earning, which is definitely a bit high to be sustainable going forward.
Hapag-Lloyd's Dividend Has Lacked Consistency
Looking back, Hapag-Lloyd's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 5 years was €0.15 in 2019, and the most recent fiscal year payment was €9.25. This works out to be a compound annual growth rate (CAGR) of approximately 128% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's encouraging to see that Hapag-Lloyd has been growing its earnings per share at 140% a year over the past five years. Hapag-Lloyd is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.
Hapag-Lloyd Looks Like A Great Dividend Stock
It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Hapag-Lloyd has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, Hapag-Lloyd has 4 warning signs (and 1 which shouldn't be ignored) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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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.
