Stock Analysis

FinecoBank Banca Fineco (BIT:FBK) Is Increasing Its Dividend To €0.49

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BIT:FBK
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FinecoBank Banca Fineco S.p.A. (BIT:FBK) has announced that it will be increasing its dividend from last year's comparable payment on the 24th of May to €0.49. Despite this raise, the dividend yield of 3.8% is only a modest boost to shareholder returns.

Check out our latest analysis for FinecoBank Banca Fineco

FinecoBank Banca Fineco's Payment Expected To Have Solid Earnings Coverage

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

FinecoBank Banca Fineco has a good history of paying out dividends, with its current track record at 8 years. Based on FinecoBank Banca Fineco's last earnings report, the payout ratio is at a decent 62%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 5.5%. Analysts forecast the future payout ratio could be 70% over the same time horizon, which is a number we think the company can maintain.

historic-dividend
BIT:FBK Historic Dividend March 19th 2023

FinecoBank Banca Fineco's Dividend Has Lacked Consistency

It's comforting to see that FinecoBank Banca Fineco has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the annual payment back then was €0.20, compared to the most recent full-year payment of €0.49. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. FinecoBank Banca Fineco 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that FinecoBank Banca Fineco has been growing its earnings per share at 15% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

FinecoBank Banca Fineco Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that FinecoBank Banca Fineco 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for FinecoBank Banca Fineco that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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