Züblin Immobilien Holding (VTX:ZUBN) Will Pay A Dividend Of CHF1.00

Züblin Immobilien Holding AG (VTX:ZUBN) has announced that it will pay a dividend of CHF1.00 per share on the 3rd of July. This means the dividend yield will be fairly typical at 3.8%.

See our latest analysis for Züblin Immobilien Holding

Züblin Immobilien Holding Is Paying Out More Than It Is Earning

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, the company was paying out 136% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 55%. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

EPS is set to fall by 26.4% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 337%, which is definitely a bit high to be sustainable going forward.

Züblin Immobilien Holding Is Still Building Its Track Record

Züblin Immobilien Holding's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The most recent annual payment of CHF1.00 is about the same as the annual payment 6 years ago. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

The Dividend Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. However, initial appearances might be deceiving. Earnings per share has been sinking by 26% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Züblin Immobilien Holding's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Züblin Immobilien Holding's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Züblin Immobilien Holding is a great stock to add to your portfolio if income is your focus.

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. For example, we've identified 5 warning signs for Züblin Immobilien Holding (1 is significant!) that you should be aware of before investing. Is Züblin Immobilien Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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