Coop Pank (TAL:CPA1T) Will Pay A Larger Dividend Than Last Year At €0.087

Coop Pank AS (TAL:CPA1T) has announced that it will be increasing its dividend from last year's comparable payment on the 7th of May to €0.087. Despite this raise, the dividend yield of 3.5% is only a modest boost to shareholder returns.

See our latest analysis for Coop Pank

Coop Pank's Earnings Will Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Having paid out dividends for only 2 years, Coop Pank does not have much of a history being a dividend paying company. Based on its last earnings report however, the payout ratio is at a comfortable 23%, meaning that Coop Pank may be able to sustain this dividend for future years if it continues on this earnings trend.

If the trend of the last few years continues, EPS will grow by 36.3% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 17% by next year, which is in a pretty sustainable range.

Coop Pank Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. The annual payment during the last 2 years was €0.03 in 2022, and the most recent fiscal year payment was €0.087. This means that it has been growing its distributions at 70% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Coop Pank has been growing its earnings per share at 36% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Coop Pank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Coop Pank 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Coop Pank that investors should take into consideration. 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.