Deutsche Bank (ETR:DBK) Will Pay A Larger Dividend Than Last Year At €0.45

The board of Deutsche Bank Aktiengesellschaft (ETR:DBK) has announced that it will be increasing its dividend by 50% on the 21st of May to €0.45, up from last year's comparable payment of €0.30. This makes the dividend yield about the same as the industry average at 2.5%.

Check out our latest analysis for Deutsche Bank

Deutsche Bank's Dividend Forecasted To Be Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, Deutsche Bank has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Deutsche Bank's latest earnings report puts its payout ratio at 13%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to expand by 25.5%. The future payout ratio could be 40% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was €0.75 in 2014, and the most recent fiscal year payment was €0.30. Doing the maths, this is a decline of about 8.8% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. We are encouraged to see that Deutsche Bank has grown earnings per share at 64% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Deutsche Bank's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Deutsche Bank that investors should take into consideration. 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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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.