Bankinter's (BME:BKT) Upcoming Dividend Will Be Larger Than Last Year's

The board of Bankinter, S.A. (BME:BKT) has announced that it will be paying its dividend of €0.1037 on the 27th of September, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 5.2%, which is fairly typical for the industry.

See our latest analysis for Bankinter

Bankinter's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Bankinter has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 23% also shows that Bankinter is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 14.6% over the next 3 years. Analysts forecast the future payout ratio could be 51% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was €0.071 in 2013, and the most recent fiscal year payment was €0.312. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year 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.

We Could See Bankinter's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Bankinter has seen EPS rising for the last five years, at 6.4% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Bankinter's prospects of growing its dividend payments in the future.

Our Thoughts On Bankinter's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Bankinter that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.