KBC Group (EBR:KBC) Is Due To Pay A Dividend Of €0.70

KBC Group NV (EBR:KBC) will pay a dividend of €0.70 on the 15th of November. This makes the dividend yield 6.6%, which will augment investor returns quite nicely.

See our latest analysis for KBC Group

KBC Group's Dividend Forecasted To Be Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

KBC Group has a good history of paying out dividends, with its current track record at 8 years. Based on KBC Group's last earnings report, the payout ratio is at a decent 52%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, EPS is forecast to rise by 8.9% over the next 3 years. Analysts estimate the future payout ratio will be 70% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

KBC Group's Dividend Has Lacked Consistency

KBC Group has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. Since 2015, the dividend has gone from €2.00 total annually to €4.00. This means that it has been growing its distributions at 9.1% 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. KBC Group might have put its house in order since then, but we remain cautious.

We Could See KBC Group's Dividend Growing

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. KBC Group has seen EPS rising for the last five years, at 7.1% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On KBC Group's Dividend

Overall, a consistent dividend is a good thing, and we think that KBC Group has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for KBC Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.