Schindler Holding's (VTX:SCHN) Upcoming Dividend Will Be Larger Than Last Year's

The board of Schindler Holding AG (VTX:SCHN) has announced that it will be paying its dividend of CHF6.00 on the 28th of March, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 2.3%, which is fairly typical for the industry.

Check out our latest analysis for Schindler Holding

Schindler Holding's Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. The last dividend was quite easily covered by Schindler Holding's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 28.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 56% by next year, which is in a pretty sustainable range.

Schindler Holding Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was CHF2.20 in 2015, and the most recent fiscal year payment was CHF6.00. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Schindler Holding's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Schindler Holding is struggling to find viable investments, so it is returning more to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

We Really Like Schindler Holding's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 16 Schindler Holding analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Schindler Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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