Bulgaria capitals

Korado-Bulgaria AD (BUL:KBG) announced a dividend of BGN 0.10

The advice of Korado-Bulgaria AD (BUL:KBG) announced that it will pay a dividend of BGN 0.10 per share on October 12. This means that the annual payout is 4.1% of the current share price, which is above the industry average.

Check out our latest analysis for Korado-Bulgaria AD

Korado-Bulgaria AD revenue easily covers distributions

We like to see strong dividend yields, but that doesn’t matter if the payout isn’t sustainable. However, prior to this announcement, Korado-Bulgaria AD’s dividend was comfortably covered by both cash flow and earnings. This means most of his income is kept to grow the business.

Over the next year, EPS could increase by 9.5% if recent trends continue. Assuming the dividend continues on recent trends, we think the payout ratio could be 60% by next year, which is in a fairly sustainable range.

BUL:KBG Historic dividend September 17, 2022

Korado-Bulgaria AD dividend lacks consistency

Korado-Bulgaria AD has been paying dividends for some time, but the track record is not stellar. For this reason, we are a little cautious about the consistency of dividends over a full economic cycle. Since 2014, the dividend has decreased from BGN 0.08 in total per year to BGN 0.29. This equates to a compound annual growth rate (CAGR) of approximately 17% per year during this period. It’s great to see strong growth in dividend payouts, but cuts are concerning as it may indicate that the payout policy is too ambitious.

We could see the Korado-Bulgaria AD dividend increase

Since the dividend has been reduced in the past, we need to check if earnings are increasing and if this could lead to higher dividends in the future. We are encouraged to see that Korado-Bulgaria AD has increased its earnings per share by 9.5% per year over the past five years. Korado-Bulgaria AD definitely has the potential to increase its dividend in the future with earnings on an uptrend and a low payout ratio.

We really like the Korado-Bulgaria AD dividend

Overall, we want the dividend to remain constant, and we believe Korado-Bulgaria AD may even increase payouts in the future. Profits easily cover distributions and the company generates plenty of cash. All of these factors taken into account, we believe this has strong potential as a dividend-paying stock.

Companies with a stable dividend policy are likely to enjoy greater investor interest than those that suffer from a more inconsistent approach. Yet investors must consider a host of other factors, aside from dividend payments, when analyzing a company. For example, we chose 2 warning signs for AD Korado-Bulgaria that investors should be aware of before committing capital to this security. If you are a dividend investor, you can also consult our curated list of high yielding dividend stocks.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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