Liechtensteinische Landesbank (VTX:LLBN) Has Announced That It Will Be Increasing Its Dividend To CHF2.30

Liechtensteinische Landesbank Aktiengesellschaft (VTX:LLBN) has announced that it will be increasing its dividend on the 12th of May to CHF2.30. The announced payment will take the dividend yield to 4.3%, which is in line with the average for the industry.

See our latest analysis for Liechtensteinische Landesbank

Liechtensteinische Landesbank's Payment Has Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. The last dividend was quite easily covered by Liechtensteinische Landesbank's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 31.0% over the next year. If the dividend continues on this path, the payout ratio could be 44% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. The first annual payment during the last 10 years was CHF0.30 in 2012, and the most recent fiscal year payment was CHF2.30. This works out to be a compound annual growth rate (CAGR) of approximately 23% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

Liechtensteinische Landesbank May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings per share has been crawling upwards at 4.5% per year. Liechtensteinische Landesbank is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen 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. For instance, we've picked out 1 warning sign for Liechtensteinische Landesbank that investors should take into consideration. Is Liechtensteinische Landesbank not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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