Bâloise Holding (VTX:BALN) Is Paying Out A Larger Dividend Than Last Year

Bâloise Holding AG (VTX:BALN) will increase its dividend on the 5th of May to CHF7.00. The announced payment will take the dividend yield to 4.1%, which is in line with the average for the industry.

Check out our latest analysis for Bâloise Holding

Bâloise Holding's Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, Bâloise Holding's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 3.5% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 55%, which is in the range that makes us comfortable with the sustainability of the dividend.

Bâloise Holding Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The first annual payment during the last 10 years was CHF4.50 in 2012, and the most recent fiscal year payment was CHF7.00. This works out to be a compound annual growth rate (CAGR) of approximately 4.5% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. However, Bâloise Holding has only grown its earnings per share at 2.5% per annum over the past five years. Bâloise Holding is struggling to find viable investments, so it is returning more to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

We Really Like Bâloise Holding's Dividend

Overall, a dividend increase is always good, and we think that Bâloise Holding is a strong income stock thanks to its track record and growing earnings. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular 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 4 Bâloise Holding analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Bâloise Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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