Zagrebacka banka d.d (ZGSE:ZABA) Has Announced A Dividend Of €1.40

Zagrebacka banka d.d.'s (ZGSE:ZABA) investors are due to receive a payment of €1.40 per share on 28th of April. This payment means that the dividend yield will be 5.2%, which is around the industry average.

Check out our latest analysis for Zagrebacka banka d.d

Zagrebacka banka d.d's Dividend Forecasted To Be Well Covered By Earnings

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

Zagrebacka banka d.d has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Zagrebacka banka d.d's last earnings report, the payout ratio is at a decent 83%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS could expand by 18.7% if the company continues along the path it has been on recently. If recent patterns in the dividend continue, the payout ratio in 12 months could be 78% which is a bit high but can definitely be sustainable.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of €0.249 in 2015 to the most recent total annual payment of €1.40. This means that it has been growing its distributions at 19% per annum over that time. 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.

Dividend Growth Could Be Constrained

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Zagrebacka banka d.d has been growing its earnings per share at 19% 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 Zagrebacka banka d.d's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Zagrebacka banka d.d 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.

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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.