Liechtensteinische Landesbank's (VTX:LLBN) Dividend Will Be Increased To CHF2.80

Liechtensteinische Landesbank Aktiengesellschaft's (VTX:LLBN) dividend will be increasing from last year's payment of the same period to CHF2.80 on 25th of April. This makes the dividend yield about the same as the industry average at 3.5%.

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Liechtensteinische Landesbank's Payment Expected To Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, Liechtensteinische Landesbank has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 51%, which means that Liechtensteinische Landesbank would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS could expand by 7.8% if recent trends continue. Estimates from analysts also put the future payout ratio of the company at 48% in the next 3 years, which we think can be pretty sustainable going forward.

See our latest analysis for Liechtensteinische Landesbank

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was CHF1.50 in 2015, and the most recent fiscal year payment was CHF2.80. This implies that the company grew its distributions at a yearly rate of about 6.4% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Liechtensteinische Landesbank might have put its house in order since then, but we remain cautious.

We Could See Liechtensteinische Landesbank's Dividend Growing

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. Liechtensteinische Landesbank has impressed us by growing EPS at 7.8% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Liechtensteinische Landesbank that investors should know about before committing capital to this stock. 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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