Julius Bär Gruppe (VTX:BAER) Has Affirmed Its Dividend Of CHF2.60

The board of Julius Bär Gruppe AG (VTX:BAER) has announced that it will pay a dividend on the 17th of April, with investors receiving CHF2.60 per share. This means the annual payment is 5.4% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Julius Bär Gruppe

Julius Bär Gruppe's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Julius Bär Gruppe has a long history of paying out dividends, with its current track record at a minimum of 10 years. Despite this history however, the company's latest earnings report actually shows that it didn't have enough earnings to cover its dividends. This is an alarming sign that could mean that Julius Bär Gruppe's dividend at its current rate may no longer be sustainable for longer.

Over the next 3 years, EPS is forecast to expand by 176.7%. Despite the current payout ratio being slightly elevated, analysts estimate the future payout ratio will be 51% over the same time period, which would make us comfortable with the sustainability of the dividend.

Julius Bär Gruppe Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from CHF0.60 total annually to CHF2.60. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Dividend Growth May Be Hard To Come By

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. In the last five years, Julius Bär Gruppe's earnings per share has shrunk at approximately 8.1% per annum. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Julius Bär Gruppe's payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. Overall, we don't think this company has the makings of a good income stock.

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. Taking the debate a bit further, we've identified 2 warning signs for Julius Bär Gruppe that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.