BELIMO Holding (VTX:BEAN) Will Pay A Dividend Of CHF8.50

The board of BELIMO Holding AG (VTX:BEAN) has announced that it will pay a dividend of CHF8.50 per share on the 2nd of April. This payment means the dividend yield will be 1.9%, which is below the average for the industry.

See our latest analysis for BELIMO Holding

BELIMO Holding's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, BELIMO Holding's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 95% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

The next year is set to see EPS grow by 16.7%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 73% which would be quite comfortable going to take the dividend forward.

BELIMO Holding Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from CHF3.00 total annually to CHF8.50. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

BELIMO Holding Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. BELIMO Holding has seen EPS rising for the last five years, at 9.7% per annum. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 analysts we track are forecasting for BELIMO Holding for free with public analyst estimates for the company. 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.