Siemens Healthineers' (ETR:SHL) Upcoming Dividend Will Be Larger Than Last Year's

Siemens Healthineers AG (ETR:SHL) will increase its dividend from last year's comparable payment on the 20th of February to €0.95. This takes the annual payment to 2.0% of the current stock price, which is about average for the industry.

See our latest analysis for Siemens Healthineers

Siemens Healthineers' Dividend Is Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Siemens Healthineers' dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 36.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 40%, which is in the range that makes us comfortable with the sustainability of the dividend.

Siemens Healthineers Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of €0.70 in 2019 to the most recent total annual payment of €0.95. This implies that the company grew its distributions at a yearly rate of about 7.9% over that duration. Siemens Healthineers has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

We Could See Siemens Healthineers' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Siemens Healthineers has seen EPS rising for the last five years, at 5.7% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

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. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Siemens Healthineers (of which 1 is concerning!) you should know about. Is Siemens Healthineers not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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