Brewin Dolphin Holdings (LON:BRW) Has Announced That It Will Be Increasing Its Dividend To UK£0.11

The board of Brewin Dolphin Holdings PLC (LON:BRW) has announced that it will be increasing its dividend on the 9th of February to UK£0.11. This makes the dividend yield 4.4%, which is above the industry average.

See our latest analysis for Brewin Dolphin Holdings

Brewin Dolphin Holdings' Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before this announcement, Brewin Dolphin Holdings was paying out 83% of earnings, but a comparatively small 64% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Earnings per share is forecast to rise by 10.9% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 80%. This is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

Brewin Dolphin Holdings Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from UK£0.071 in 2011 to the most recent annual payment of UK£0.16. This means that it has been growing its distributions at 8.3% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Brewin Dolphin Holdings Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Brewin Dolphin Holdings has been growing its earnings per share at 5.4% a year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.

Our Thoughts On Brewin Dolphin Holdings' Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 8 Brewin Dolphin Holdings analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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