Julius Bär Gruppe (VTX:BAER) Is Increasing Its Dividend To CHF2.60

The board of Julius Bär Gruppe AG (VTX:BAER) has announced that it will be increasing its dividend on the 20th of April to CHF2.60. This makes the dividend yield 4.8%, which is above the industry average.

View our latest analysis for Julius Bär Gruppe

Julius Bär Gruppe's Earnings Easily Cover the Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Julius Bär Gruppe's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 1.7% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 56%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Julius Bär Gruppe Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from CHF0.60 in 2012 to the most recent annual payment of CHF1.50. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Julius Bär Gruppe has impressed us by growing EPS at 13% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Julius Bär Gruppe's Dividend

Overall, a dividend increase is always good, and we think that Julius Bär Gruppe is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 14 analysts we track are forecasting for Julius Bär Gruppe for free with public analyst estimates for the company. Is Julius Bär Gruppe not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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