Erste Group Bank's (VIE:EBS) Shareholders Will Receive A Bigger Dividend Than Last Year

Erste Group Bank AG's (VIE:EBS) dividend will be increasing from last year's payment of the same period to €3.00 on 28th of May. The payment will take the dividend yield to 4.2%, which is in line with the average for the industry.

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Erste Group Bank's Payment Expected To Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having paid out dividends for 9 years, Erste Group Bank has a good history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 42%shows that Erste Group Bank would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 17.4%. Analysts forecast the future payout ratio could be 45% over the same time horizon, which is a number we think the company can maintain.

View our latest analysis for Erste Group Bank

Erste Group Bank Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of €0.50 in 2016 to the most recent total annual payment of €3.00. This means that it has been growing its distributions at 22% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Erste Group Bank has seen EPS rising for the last five years, at 22% per annum. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like Erste Group Bank's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 14 Erste Group Bank analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Erste Group Bank 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.