Aktieselskabet Schouw's (CPH:SCHO) Upcoming Dividend Will Be Larger Than Last Year's

The board of Aktieselskabet Schouw & Co. (CPH:SCHO) has announced that it will be paying its dividend of DKK16.00 on the 15th of April, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 2.9%.

View our latest analysis for Aktieselskabet Schouw

Aktieselskabet Schouw's Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. The last dividend was quite easily covered by Aktieselskabet Schouw's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 86.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 23% by next year, which is in a pretty sustainable range.

Aktieselskabet Schouw Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was DKK6.00, compared to the most recent full-year payment of DKK16.00. This means that it has been growing its distributions at 10% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 3.7% a year for the past five years, which isn't massive but still better than seeing them shrink. Aktieselskabet Schouw is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

Aktieselskabet Schouw Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Aktieselskabet Schouw 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 of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 Aktieselskabet Schouw that investors should know about before committing capital to this stock. 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.