UNIQA Insurance Group's (VIE:UQA) Dividend Will Be Increased To €0.57

The board of UNIQA Insurance Group AG (VIE:UQA) has announced that it will be increasing its dividend by 3.6% on the 17th of June to €0.57, up from last year's comparable payment of €0.55. This takes the dividend yield to 6.8%, which shareholders will be pleased with.

Check out our latest analysis for UNIQA Insurance Group

UNIQA Insurance Group's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, UNIQA Insurance Group's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 11.9% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was €0.25 in 2014, and the most recent fiscal year payment was €0.55. This implies that the company grew its distributions at a yearly rate of about 8.2% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. UNIQA Insurance Group might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that UNIQA Insurance Group has been growing its earnings per share at 12% a year over the past five years. UNIQA Insurance Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

UNIQA Insurance Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that UNIQA Insurance Group is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income 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. Taking the debate a bit further, we've identified 1 warning sign for UNIQA Insurance Group that investors need to be conscious of moving forward. Is UNIQA Insurance Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.