BNP Paribas (EPA:BNP) Will Pay A Larger Dividend Than Last Year At €4.79

BNP Paribas SA (EPA:BNP) has announced that it will be increasing its dividend from last year's comparable payment on the 21st of May to €4.79. This makes the dividend yield about the same as the industry average at 6.2%.

BNP Paribas' Dividend Forecasted To Be Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time.

Having distributed dividends for at least 10 years, BNP Paribas has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 50%, which means that BNP Paribas would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 27.4% over the next 3 years. The future payout ratio could be 50% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

View our latest analysis for BNP Paribas

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the annual payment back then was €1.50, compared to the most recent full-year payment of €4.79. This implies that the company grew its distributions at a yearly rate of about 12% 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.

BNP Paribas Could Grow Its Dividend

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. BNP Paribas has impressed us by growing EPS at 9.1% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like BNP Paribas' Dividend

Overall, a dividend increase is always good, and we think that BNP Paribas is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for BNP Paribas that investors should take into consideration. Is BNP Paribas 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.