ANZ Group Holdings' (ASX:ANZ) Shareholders Will Receive A Bigger Dividend Than Last Year

ANZ Group Holdings Limited's (ASX:ANZ) dividend will be increasing from last year's payment of the same period to A$0.94 on 22nd of December. Based on this payment, the dividend yield for the company will be 6.5%, which is fairly typical for the industry.

View our latest analysis for ANZ Group Holdings

ANZ Group Holdings' Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

ANZ Group Holdings has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but ANZ Group Holdings' payout ratio of 68% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to fall by 1.2% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 71% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was A$1.52 in 2013, and the most recent fiscal year payment was A$1.62. Dividend payments have grown at less than 1% a year over this period. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

ANZ Group Holdings May Find It Hard To Grow The Dividend

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. Unfortunately, ANZ Group Holdings' earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

Overall, we always like to see the dividend being raised, but we don't think ANZ Group Holdings will make a great income stock. While ANZ Group Holdings is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for ANZ Group Holdings (of which 1 can't be ignored!) you should know about. Is ANZ Group Holdings 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.