Banco Santander-Chile's (SNSE:BSANTANDER) Upcoming Dividend Will Be Larger Than Last Year's

Banco Santander-Chile (SNSE:BSANTANDER) will increase its dividend on the 29th of April to CLP3.19, which is 73% higher than last year's payment from the same period of CLP1.84. Although the dividend is now higher, the yield is only 3.4%, which is below the industry average.

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Banco Santander-Chile's Payment Expected To Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Banco Santander-Chile has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 46%, which means that Banco Santander-Chile would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 21.5% over the next 3 years. The future payout ratio could be 57% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Check out our latest analysis for Banco Santander-Chile

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from CLP1.41 total annually to CLP1.84. This implies that the company grew its distributions at a yearly rate of about 2.7% over that duration. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

We Could See Banco Santander-Chile's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Banco Santander-Chile has seen EPS rising for the last five years, at 6.8% per annum. 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.

Our Thoughts On Banco Santander-Chile's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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. For instance, we've picked out 1 warning sign for Banco Santander-Chile that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.