BAWAG Group's (VIE:BG) Shareholders Will Receive A Bigger Dividend Than Last Year

BAWAG Group AG (VIE:BG) will increase its dividend from last year's comparable payment on the 15th of April to €5.00. This makes the dividend yield 10.0%, which is above the industry average.

See our latest analysis for BAWAG Group

BAWAG Group's Dividend Forecasted To Be Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having paid out dividends for 6 years, BAWAG Group has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but BAWAG Group's payout ratio of 60% is a good sign for current shareholders as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 12.7% over the next 3 years. The future payout ratio could be 56% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

BAWAG Group's Dividend Has Lacked Consistency

BAWAG Group has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of €0.58 in 2018 to the most recent total annual payment of €5.00. This implies that the company grew its distributions at a yearly rate of about 43% over that duration. BAWAG Group has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that BAWAG Group has been growing its earnings per share at 15% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like BAWAG Group's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for BAWAG Group (1 makes us a bit uncomfortable!) that you should be aware of before investing. Is BAWAG Group not quite the opportunity you were looking for? Why not check out our selection of top 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.