BKS Bank (VIE:BKS) Has Announced That It Will Be Increasing Its Dividend To €0.40

BKS Bank AG (VIE:BKS) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of May to €0.40. This takes the annual payment to 2.5% of the current stock price, which unfortunately is below what the industry is paying.

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BKS Bank's Dividend Forecasted To Be Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Having distributed dividends for at least 10 years, BKS Bank has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, BKS Bank's latest earnings report puts its payout ratio at 11%, showing that the company can pay out its dividends comfortably.

Over the next year, EPS could expand by 10.5% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 11%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for BKS Bank

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from €0.23 total annually to €0.40. This means that it has been growing its distributions at 5.7% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. BKS Bank might have put its house in order since then, but we remain cautious.

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 BKS Bank has been growing its earnings per share at 11% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for BKS Bank's prospects of growing its dividend payments in the future.

BKS Bank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that BKS Bank is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in BKS Bank stock. 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.