Banco di Desio e della Brianza's (BIT:BDB) Shareholders Will Receive A Bigger Dividend Than Last Year

Banco di Desio e della Brianza S.p.A. (BIT:BDB) has announced that it will be increasing its periodic dividend on the 30th of April to €0.4566, which will be 73% higher than last year's comparable payment amount of €0.263. Even though the dividend went up, the yield is still quite low at only 3.3%.

Check out 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

If it is predictable over a long period, even low dividend yields can be attractive.

Banco di Desio e della Brianza has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Banco di Desio e della Brianza's last earnings report, the payout ratio is at a decent 29%, meaning that the company is able to pay out its dividend with a bit of room to spare.

If the trend of the last few years continues, EPS will grow by 35.0% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 41% by next year, which we think can be pretty sustainable going forward.

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 €0.0214, compared to the most recent full-year payment of €0.263. This implies that the company grew its distributions at a yearly rate of about 29% over that duration. Banco di Desio e della Brianza has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Banco di Desio e della Brianza has been growing its earnings per share at 35% a year over the past three years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Banco di Desio e della Brianza Looks Like A Great Dividend Stock

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. 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.

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. As an example, we've identified 3 warning signs for Banco di Desio e della Brianza that you should be aware of before investing. Is Banco di Desio e della Brianza 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.