Barclays' (LON:BARC) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Barclays PLC (LON:BARC) has announced that it will be increasing its dividend by 3.8% on the 4th of April to £0.055, up from last year's comparable payment of £0.053. This takes the annual payment to 2.9% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for Barclays

Barclays' Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Barclays has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Barclays' latest earnings report puts its payout ratio at 23%, showing that the company can pay out its dividends comfortably.

Looking forward, EPS is forecast to rise by 51.1% over the next 3 years. The future payout ratio could be 24% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from £0.065 total annually to £0.084. This works out to be a compound annual growth rate (CAGR) of approximately 2.6% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Barclays has grown earnings per share at 21% per 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.

Barclays Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Barclays 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Barclays that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.