KWS SAAT SE KGaA's (ETR:KWS) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of KWS SAAT SE & Co. KGaA (ETR:KWS) has announced that it will be paying its dividend of €1.25 on the 8th of December, an increased payment from last year's comparable dividend. This takes the annual payment to 1.9% of the current stock price, which unfortunately is below what the industry is paying.

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KWS SAAT SE KGaA's Future Dividend Projections Appear Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, KWS SAAT SE KGaA was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 43.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for KWS SAAT SE KGaA

KWS SAAT SE KGaA 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 annual payment during the last 10 years was €0.60 in 2015, and the most recent fiscal year payment was €1.25. This works out to be a compound annual growth rate (CAGR) of approximately 7.6% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

We Could See KWS SAAT SE KGaA's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. KWS SAAT SE KGaA has seen EPS rising for the last five years, at 8.0% per annum. KWS SAAT SE KGaA definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like KWS SAAT SE KGaA'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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for KWS SAAT SE KGaA for free with public analyst estimates for the company. 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.