Jyske Bank (CPH:JYSK) Is Paying Out A Larger Dividend Than Last Year

The board of Jyske Bank A/S (CPH:JYSK) has announced that it will be paying its dividend of DKK24.00 on the 28th of March, an increased payment from last year's comparable dividend. Although the dividend is now higher, the yield is only 4.1%, which is below the industry average.

View our latest analysis for Jyske Bank

Jyske Bank's Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having paid out dividends for 9 years, Jyske Bank has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Jyske Bank's payout ratio of 30% is a good sign for current shareholders as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to fall by 3.4% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 29% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Jyske Bank's Dividend Has Lacked Consistency

Looking back, Jyske Bank's dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 9 years was DKK5.25 in 2016, and the most recent fiscal year payment was DKK24.00. This means that it has been growing its distributions at 18% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Jyske Bank has been growing its earnings per share at 23% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Jyske Bank Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an 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. Case in point: We've spotted 2 warning signs for Jyske Bank (of which 1 is a bit concerning!) you should know about. Is Jyske Bank 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.