Coop Pank's (TAL:CPA1T) Dividend Is Being Reduced To €0.07

Coop Pank AS (TAL:CPA1T) has announced that on 6th of May, it will be paying a dividend of€0.07, which a reduction from last year's comparable dividend. This payment takes the dividend yield to 3.5%, which only provides a modest boost to overall returns.

Coop Pank'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 only 3 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 22%, meaning that Coop Pank may be able to sustain this dividend for future years if it continues on this earnings trend.

Over the next year, EPS could expand by 28.7% if recent trends continue. 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.

View our latest analysis for Coop Pank

Coop Pank's Dividend Has Lacked Consistency

Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The dividend has gone from an annual total of €0.03 in 2022 to the most recent total annual payment of €0.07. This implies that the company grew its distributions at a yearly rate of about 33% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

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 Coop Pank has been growing its earnings per share at 29% 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.

We Really Like Coop Pank's Dividend

It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Coop Pank has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. All of these factors considered, we think this has solid potential as a dividend 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. See if management have their own wealth at stake, by checking insider shareholdings in Coop Pank stock. Is Coop Pank 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.