Schwälbchen Molkerei Jakob Berz (FRA:SMB) Has Affirmed Its Dividend Of €0.80

The board of Schwälbchen Molkerei Jakob Berz AG (FRA:SMB) has announced that it will pay a dividend on the 30th of April, with investors receiving €0.80 per share. This payment means the dividend yield will be 1.5%, which is below the average for the industry.

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Schwälbchen Molkerei Jakob Berz's Payment Could Potentially Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Schwälbchen Molkerei Jakob Berz was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share could rise by 23.6% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 10% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Schwälbchen Molkerei Jakob Berz

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of €0.60 in 2015 to the most recent total annual payment of €0.80. This works out to be a compound annual growth rate (CAGR) of approximately 2.9% a year over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Schwälbchen Molkerei Jakob Berz has seen EPS rising for the last five years, at 24% per annum. 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.

Schwälbchen Molkerei Jakob Berz Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 3 warning signs for Schwälbchen Molkerei Jakob Berz that you should be aware of before investing. Is Schwälbchen Molkerei Jakob Berz 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.