Deutsche Börse (ETR:DB1) Has Announced That It Will Be Increasing Its Dividend To €3.20

Deutsche Börse AG's (ETR:DB1) dividend will be increasing to €3.20 on 23rd of May. Despite this raise, the dividend yield of 1.9% is only a modest boost to shareholder returns.

View our latest analysis for Deutsche Börse

Deutsche Börse's Earnings Easily Cover the Distributions

If it is predictable over a long period, even low dividend yields can be attractive. The last dividend was quite comfortably covered by Deutsche Börse's earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Over the next year, EPS is forecast to expand by 6.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 44% by next year, which is in a pretty sustainable range.

Deutsche Börse 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 dividend has gone from €2.10 in 2012 to the most recent annual payment of €3.20. This means that it has been growing its distributions at 4.3% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Deutsche Börse has seen EPS rising for the last five years, at 11% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Our Thoughts On Deutsche Börse's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payments look okay by most measures, the lack of cash flow could definitely cause problems for them in the future. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 13 Deutsche Börse analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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