Banca Popolare di Sondrio (BIT:BPSO) Has Announced That It Will Be Increasing Its Dividend To €0.28

Banca Popolare di Sondrio S.p.A (BIT:BPSO) has announced that it will be increasing its periodic dividend on the 24th of May to €0.28, which will be 40% higher than last year's comparable payment amount of €0.20. This takes the annual payment to 5.0% of the current stock price, which is about average for the industry.

Check out our latest analysis for Banca Popolare di Sondrio

Banca Popolare di Sondrio's Payment Expected To Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Banca Popolare di Sondrio has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 41%, which means that Banca Popolare di Sondrio would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 31.9%. Analysts forecast the future payout ratio could be 50% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was €0.0818 in 2013, and the most recent fiscal year payment was €0.20. This means that it has been growing its distributions at 9.4% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Has Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Banca Popolare di Sondrio has impressed us by growing EPS at 9.6% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Banca Popolare di Sondrio Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Banca Popolare di Sondrio that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.