Danske Andelskassers Bank's (CPH:DAB) Upcoming Dividend Will Be Larger Than Last Year's

Danske Andelskassers Bank A/S' (CPH:DAB) dividend will be increasing from last year's payment of the same period to DKK0.60 on 28th of April. Even though the dividend went up, the yield is still quite low at only 2.6%.

Our free stock report includes 1 warning sign investors should be aware of before investing in Danske Andelskassers Bank. Read for free now.

Danske Andelskassers Bank's Earnings Will Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive.

Danske Andelskassers Bank has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Based on Danske Andelskassers Bank's last earnings report, the payout ratio is at a decent 30%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 9.0% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could be 46%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

View our latest analysis for Danske Andelskassers Bank

Danske Andelskassers Bank's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. Since 2020, the annual payment back then was DKK0.56, compared to the most recent full-year payment of DKK0.36. The dividend has shrunk at around 8.5% a year during that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth Is Doubtful

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. It's not great to see that Danske Andelskassers Bank's earnings per share has fallen at approximately 9.0% per year over the past five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Danske Andelskassers Bank will make a great income stock. While Danske Andelskassers Bank is earning enough to cover the dividend, we are generally unimpressed with its future prospects. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Danske Andelskassers Bank that you should be aware of before investing. 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.