BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-'s (FRA:BLH) Dividend Will Be Increased To €0.50

BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-'s (FRA:BLH) periodic dividend will be increasing on the 16th of June to €0.50, with investors receiving 11% more than last year's €0.45. This takes the dividend yield to 5.0%, which shareholders will be pleased with.

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BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-'s Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before this announcement, BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877- was paying out 88% of earnings, but a comparatively small 1.3% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

If the trend of the last few years continues, EPS will grow by 19.9% over the next 12 months. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 49% which brings it into quite a comfortable range.

View our latest analysis for BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the dividend has gone from €0.40 total annually to €0.45. This means that it has been growing its distributions at 1.2% per annum 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.

BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-'s Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877- has grown earnings per share at 20% per year over the past five years. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

Our Thoughts On BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877-'s Dividend

Overall, we always like to see the dividend being raised, but we don't think BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877- will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 3 warning signs for BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877- that investors should know about before committing capital to this stock. Is BREMER LAGERHAUS-GESELLSCHAFT -Aktiengesellschaft von 1877- 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.