Cembra Money Bank (VTX:CMBN) Has Announced That It Will Be Increasing Its Dividend To CHF4.25

Cembra Money Bank AG (VTX:CMBN) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of April to CHF4.25. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns.

Cembra Money Bank's Dividend Forecasted To Be Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Cembra Money Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 73%, which means that Cembra Money Bank would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 31.9% over the next 3 years. Analysts estimate the future payout ratio will be 75% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Cembra Money Bank

Cembra Money Bank Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of CHF2.85 in 2015 to the most recent total annual payment of CHF4.25. This means that it has been growing its distributions at 4.1% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Cembra Money Bank's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Slow growth and a high payout ratio could mean that Cembra Money Bank has maxed out the amount that it has been able to pay to shareholders. When a company prefers to pay out cash to its shareholders instead of reinvesting it, this can often say a lot about that company's dividend prospects.

Cembra Money Bank Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 Cembra Money Bank analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Cembra Money Bank not quite the opportunity you were looking for? Why not check out our selection of top 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.