Møns Bank (CPH:MNBA) Is Paying Out A Larger Dividend Than Last Year

Møns Bank A/S' (CPH:MNBA) periodic dividend will be increasing on the 24th of March to DKK6.00, with investors receiving 50% more than last year's DKK4.00. Even though the dividend went up, the yield is still quite low at only 1.7%.

Check out our latest analysis for Møns Bank

Møns Bank's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Møns Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Møns Bank's payout ratio sits at 8.7%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS could expand by 19.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 13% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was DKK2.00, compared to the most recent full-year payment of DKK4.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Møns Bank might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Møns Bank has seen EPS rising for the last five years, at 20% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Møns Bank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Møns Bank 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 in all, this checks a lot of the boxes we look for when choosing an income 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. Taking the debate a bit further, we've identified 2 warning signs for Møns Bank that investors need to be conscious of moving forward. 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.