Stock Analysis

Hannover Rück's (ETR:HNR1) Upcoming Dividend Will Be Larger Than Last Year's

XTRA:HNR1
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Hannover Rück SE's (ETR:HNR1) dividend will be increasing from last year's payment of the same period to €7.20 on 9th of May. Even though the dividend went up, the yield is still quite low at only 2.8%.

View our latest analysis for Hannover Rück

Hannover Rück's Earnings Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Hannover Rück's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 39.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 36% by next year, which is in a pretty sustainable range.

historic-dividend
XTRA:HNR1 Historic Dividend March 21st 2024

Hannover Rück Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was €2.60, compared to the most recent full-year payment of €7.20. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income 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. Hannover Rück has seen EPS rising for the last five years, at 11% per annum. Hannover Rück definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Hannover Rück's Dividend

Overall, a dividend increase is always good, and we think that Hannover Rück is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 14 analysts we track are forecasting for Hannover Rück 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.