Banco di Desio e della Brianza (BIT:BDB) Is Increasing Its Dividend To €0.1969

The board of Banco di Desio e della Brianza S.p.A. (BIT:BDB) has announced that it will be paying its dividend of €0.1969 on the 10th of May, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 5.9%, which is fairly typical for the industry.

See our latest analysis for Banco di Desio e della Brianza

Banco di Desio e della Brianza's Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Banco di Desio e della Brianza has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Based on Banco di Desio e della Brianza's last earnings report, the payout ratio is at a decent 25%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share could rise by 12.6% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Banco di Desio e della Brianza's Dividend Has Lacked Consistency

Banco di Desio e della Brianza has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2014, the annual payment back then was €0.0214, compared to the most recent full-year payment of €0.1969. This works out to be a compound annual growth rate (CAGR) of approximately 28% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Banco di Desio e della Brianza has grown earnings per share at 13% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Banco di Desio e della Brianza's Dividend

Overall, a dividend increase is always good, and we think that Banco di Desio e della Brianza is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Banco di Desio e della Brianza that investors should know about before committing capital to this stock. 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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