UNIQA Insurance Group (VIE:UQA) Is Due To Pay A Dividend Of €0.18

The board of UNIQA Insurance Group AG (VIE:UQA) has announced that it will pay a dividend on the 14th of June, with investors receiving €0.18 per share. The dividend yield is 2.4% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for UNIQA Insurance Group

UNIQA Insurance Group's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, UNIQA Insurance Group's dividend was only 45% of earnings, however it was paying out 122% of free cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

The next year is set to see EPS grow by 85.2%. If the dividend continues on this path, the payout ratio could be 23% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. Since 2011, the dividend has gone from €0.40 to €0.18. Doing the maths, this is a decline of about 7.7% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Over the past five years, it looks as though UNIQA Insurance Group's EPS has declined at around 14% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

UNIQA Insurance Group's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for UNIQA Insurance Group (of which 1 is concerning!) you should know about. We have also put together a list of global stocks with a solid dividend.

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