Partners Group Holding's (VTX:PGHN) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Partners Group Holding AG (VTX:PGHN) has announced that it will be paying its dividend of CHF39.00 on the 28th of May, an increased payment from last year's comparable dividend. This takes the dividend yield to 3.2%, which shareholders will be pleased with.

View our latest analysis for Partners Group Holding

Partners Group Holding's Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, the company was paying out 101% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Earnings per share is forecast to rise by 55.8% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 75% - on the higher side, but we wouldn't necessarily say this is unsustainable.

Partners Group Holding Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was CHF7.25, compared to the most recent full-year payment of CHF39.00. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. 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 impressed us by growing EPS at 6.0% per year over the past five years. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Partners Group Holding's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, Partners Group Holding has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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