HORNBACH Holding KGaA (ETR:HBH) Will Pay A Dividend Of €2.40

The board of HORNBACH Holding AG & Co. KGaA (ETR:HBH) has announced that it will pay a dividend on the 10th of July, with investors receiving €2.40 per share. This payment means that the dividend yield will be 2.9%, which is around the industry average.

See our latest analysis for HORNBACH Holding KGaA

HORNBACH Holding KGaA's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, HORNBACH Holding KGaA's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 46.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

HORNBACH Holding KGaA Doesn't Have A Long Payment History

HORNBACH Holding KGaA's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of €1.50 in 2016 to the most recent total annual payment of €2.40. This implies that the company grew its distributions at a yearly rate of about 6.1% over that duration. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that HORNBACH Holding KGaA has been growing its earnings per share at 14% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for HORNBACH Holding KGaA's prospects of growing its dividend payments in the future.

HORNBACH Holding KGaA Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think HORNBACH Holding KGaA might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for HORNBACH Holding KGaA that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.