Cembra Money Bank's (VTX:CMBN) Upcoming Dividend Will Be Larger Than Last Year's

Cembra Money Bank AG (VTX:CMBN) will increase its dividend on the 27th of April to CHF3.95, which is 2.6% higher than last year's payment from the same period of CHF3.85. This takes the dividend yield to 4.9%, which shareholders will be pleased with.

View our latest analysis for Cembra Money Bank

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

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Having paid out dividends for 9 years, Cembra Money Bank has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Cembra Money Bank's payout ratio of 66% is a good sign for current shareholders as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 11.7%. Analysts estimate the future payout ratio will be 69% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Cembra Money Bank Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of CHF2.85 in 2014 to the most recent total annual payment of CHF3.85. This implies that the company grew its distributions at a yearly rate of about 3.4% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. However, Cembra Money Bank has only grown its earnings per share at 2.4% per annum over the past five years. Cembra Money Bank is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 2 warning signs for Cembra Money Bank you should be aware of, and 1 of them makes us a bit uncomfortable. 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.