NV Bekaert's (EBR:BEKB) Upcoming Dividend Will Be Larger Than Last Year's

NV Bekaert SA (EBR:BEKB) will increase its dividend on the 16th of May to €1.05. This takes the annual payment to 3.0% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for NV Bekaert

NV Bekaert's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, NV Bekaert was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

EPS is set to fall by 28.5% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 20%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from €1.17 in 2012 to the most recent annual payment of €1.50. This means that it has been growing its distributions at 2.5% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

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. NV Bekaert has impressed us by growing EPS at 31% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

NV Bekaert Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that NV Bekaert is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for NV Bekaert (of which 1 is significant!) you should know about. Is NV Bekaert not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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