PSP Swiss Property (VTX:PSPN) Has Announced That It Will Be Increasing Its Dividend To CHF3.80

PSP Swiss Property AG's (VTX:PSPN) dividend will be increasing from last year's payment of the same period to CHF3.80 on 13th of April. This takes the annual payment to 3.6% of the current stock price, which is about average for the industry.

See our latest analysis for PSP Swiss Property

PSP Swiss Property's Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, PSP Swiss Property's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 40.8% over the next 12 months. If recent patterns in the dividend continue, we could see the payout ratio reaching 91% in the next 12 months, which is on the higher end of the range we would say is sustainable.

PSP Swiss Property Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was CHF3.00 in 2013, and the most recent fiscal year payment was CHF3.80. This implies that the company grew its distributions at a yearly rate of about 2.4% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that PSP Swiss Property has been growing its earnings per share at 5.1% a year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

PSP Swiss Property Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that PSP Swiss Property is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. To that end, PSP Swiss Property has 4 warning signs (and 2 which are significant) 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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