Glarner Kantonalbank's (VTX:GLKBN) Dividend Is Being Reduced To CHF1.00

Glarner Kantonalbank (VTX:GLKBN) is reducing its dividend to CHF1.00 on the 2nd of Maywhich is 9.1% less than last year's comparable payment of CHF1.10. This means the annual payment is 4.9% of the current stock price, which is above the average for the industry.

See our latest analysis for Glarner Kantonalbank

Glarner Kantonalbank's Dividend Forecasted To Be Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Glarner Kantonalbank 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 Glarner Kantonalbank's payout ratio of 57% is a good sign as this means that earnings decently cover dividends.

EPS is set to fall by 3.0% over the next 12 months if recent trends continue. Fortunately, analysts estimate the future payout ratio could be 59% in 3 years, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Glarner Kantonalbank Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of CHF0.60 in 2015 to the most recent total annual payment of CHF1.10. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Glarner Kantonalbank has seen earnings per share falling at 3.0% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On Glarner Kantonalbank's Dividend

Overall, while it's not great to see that the dividend has been cut, we think the company is now in a good position to make consistent payments going into the future. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Now, if you want to look closer, it would be worth checking out our free research on Glarner Kantonalbank management tenure, salary, and performance. If you are a dividend investor, you might also want to look at our curated list of high yield 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.