Bossard Holding's (VTX:BOSN) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Bossard Holding AG (VTX:BOSN) has announced that it will be paying its dividend of CHF5.50 on the 21st of April, an increased payment from last year's comparable dividend. The payment will take the dividend yield to 2.4%, which is in line with the average for the industry.

View our latest analysis for Bossard Holding

Bossard Holding's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, Bossard Holding's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

Looking forward, earnings per share is forecast to rise by 25.1% over the next year. If the dividend continues on this path, the payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2013, the annual payment back then was CHF2.88, compared to the most recent full-year payment of CHF5.50. This means that it has been growing its distributions at 6.7% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Bossard Holding Could Grow Its Dividend

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. It's encouraging to see that Bossard Holding has been growing its earnings per share at 5.3% a year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On Bossard Holding's Dividend

Overall, we always like to see the dividend being raised, but we don't think Bossard Holding will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

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. Case in point: We've spotted 3 warning signs for Bossard Holding (of which 2 are potentially serious!) you should know about. Is Bossard Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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