VERBIO Vereinigte BioEnergie (ETR:VBK) Has Announced A Dividend Of €0.20

VERBIO Vereinigte BioEnergie AG (ETR:VBK) will pay a dividend of €0.20 on the 7th of February. This payment means the dividend yield will be 0.7%, which is below the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. VERBIO Vereinigte BioEnergie's stock price has reduced by 31% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

View our latest analysis for VERBIO Vereinigte BioEnergie

VERBIO Vereinigte BioEnergie's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. VERBIO Vereinigte BioEnergie is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to expand by 165.7%. If the dividend continues on this path, the payout ratio could be 6.8% by next year, which we think can be pretty sustainable going forward.

VERBIO Vereinigte BioEnergie Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2015, the annual payment back then was €0.10, compared to the most recent full-year payment of €0.20. This implies that the company grew its distributions at a yearly rate of about 9.1% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider VERBIO Vereinigte BioEnergie to be a consistent dividend paying stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that VERBIO Vereinigte BioEnergie has been growing its earnings per share at 38% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Our Thoughts On VERBIO Vereinigte BioEnergie's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While VERBIO Vereinigte BioEnergie is earning enough to cover the payments, the cash flows are lacking. We don't think VERBIO Vereinigte BioEnergie is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for VERBIO Vereinigte BioEnergie you should be aware of, and 1 of them makes us a bit uncomfortable. 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.