Berentzen-Gruppe (ETR:BEZ) Is Paying Out A Larger Dividend Than Last Year

The board of Berentzen-Gruppe Aktiengesellschaft (ETR:BEZ) has announced that it will be increasing its dividend by 69% on the 23rd of May to €0.22. This will take the annual payment from 2.0% to 3.4% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Berentzen-Gruppe

Berentzen-Gruppe's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Berentzen-Gruppe's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Earnings per share could rise by 0.4% over the next year if things go the same way as they have for the last few years. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 84%, which is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

Berentzen-Gruppe's Dividend Has Lacked Consistency

Looking back, Berentzen-Gruppe's dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. The first annual payment during the last 6 years was €0.20 in 2016, and the most recent fiscal year payment was €0.13. The dividend has shrunk at around 6.9% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Berentzen-Gruppe hasn't seen much change in its earnings per share over the last five years. The company has been growing at a pretty soft 0.4% per annum, and is paying out quite a lot of its earnings to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 5 warning signs for Berentzen-Gruppe (1 is significant!) that you should be aware of before investing. Is Berentzen-Gruppe not quite the opportunity you were looking for? Why not check out our selection of top 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.