Is Bureau Veritas SA (EPA:BVI) A Smart Pick For Income Investors?
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Over the past 10 years Bureau Veritas SA (EPA:BVI) has been paying dividends to shareholders. The company is currently worth €8.6b, and now yields roughly 2.8%. Should it have a place in your portfolio? Let’s take a look at Bureau Veritas in more detail.
Check out our latest analysis for Bureau Veritas
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Is it the top 25% annual dividend yield payer?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has the amount of dividend per share grown over the past?
Can it afford to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Bureau Veritas fare?
The company currently pays out 74% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 54% which, assuming the share price stays the same, leads to a dividend yield of 3.2%. However, EPS should increase to €0.84, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of BVI it has increased its DPS from €0.18 to €0.56 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Bureau Veritas produces a yield of 2.8%, which is high for Professional Services stocks but still below the market’s top dividend payers.
Next Steps:
Taking into account the dividend metrics, Bureau Veritas ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three essential aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for BVI’s future growth? Take a look at our free research report of analyst consensus for BVI’s outlook.
Valuation: What is BVI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BVI is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. On rare occasion, data errors may occur. Thank you for reading.
