FinecoBank Banca Fineco (BIT:FBK) Is Increasing Its Dividend To €0.69

The board of FinecoBank Banca Fineco S.p.A. (BIT:FBK) has announced that it will be paying its dividend of €0.69 on the 22nd of May, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 5.4%.

View our latest analysis for FinecoBank Banca Fineco

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

Solid dividend yields are great, but they only really help us if the payment is sustainable.

FinecoBank Banca Fineco has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 58%shows that FinecoBank Banca Fineco would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to grow by 5.5% over the next 3 years. Analysts estimate the future payout ratio could reach 78% over that same time period, which is on the higher side, but certainly still feasible.

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. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 9 years was €0.20 in 2015, and the most recent fiscal year payment was €0.69. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. 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.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that FinecoBank Banca Fineco has grown earnings per share at 20% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that FinecoBank Banca Fineco could prove to be a strong dividend payer.

Our Thoughts On FinecoBank Banca Fineco's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We don't think FinecoBank Banca Fineco is a great stock to add to your portfolio if income is your focus.

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. For example, we've identified 2 warning signs for FinecoBank Banca Fineco (1 is concerning!) that you should be aware of before investing. Is FinecoBank Banca Fineco 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.