Partners Group Holding (VTX:PGHN) Is Increasing Its Dividend To CHF42.00

Partners Group Holding AG (VTX:PGHN) will increase its dividend from last year's comparable payment on the 27th of May to CHF42.00. This makes the dividend yield 3.9%, which is above the industry average.

We've discovered 2 warning signs about Partners Group Holding. View them for free.

Partners Group Holding's Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the company was paying out 97% of what it was earning. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

Earnings per share is forecast to rise by 47.5% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 75%, which is on the higher side, but certainly still feasible.

Check out our latest analysis for Partners Group Holding

Partners Group Holding Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of CHF8.50 in 2015 to the most recent total annual payment of CHF42.00. This means that it has been growing its distributions at 17% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

There Isn't Much Room To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Partners Group Holding has seen EPS rising for the last five years, at 5.1% per annum. However, the company isn't reinvesting a lot back into the business, so we would expect the growth rate to slow down somewhat in the future.

Partners Group Holding's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Partners Group Holding's payments are rock solid. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Partners Group Holding (of which 1 doesn't sit too well with us!) you should know about. Is Partners Group Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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