Vaudoise Assurances Holding (VTX:VAHN) Is Paying Out A Larger Dividend Than Last Year

Vaudoise Assurances Holding SA (VTX:VAHN) has announced that it will be increasing its dividend from last year's comparable payment on the 19th of May to CHF24.00. Based on this payment, the dividend yield for the company will be 4.4%, which is fairly typical for the industry.

Our free stock report includes 1 warning sign investors should be aware of before investing in Vaudoise Assurances Holding. Read for free now.

Vaudoise Assurances Holding's Payment Could Potentially Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last dividend, Vaudoise Assurances Holding is earning enough to cover the payment, but then it makes up 109% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

If the trend of the last few years continues, EPS will grow by 2.2% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 50%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Vaudoise Assurances Holding

Vaudoise Assurances Holding Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the annual payment back then was CHF12.00, compared to the most recent full-year payment of CHF24.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 2.2% per year. The company has been growing at a pretty soft 2.2% per annum, and is paying out quite a lot of its earnings to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

Our Thoughts On Vaudoise Assurances Holding's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Vaudoise Assurances Holding's payments are rock solid. While Vaudoise Assurances Holding is earning enough to cover the payments, the cash flows are lacking. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Vaudoise Assurances Holding that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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