FinecoBank Banca Fineco (BIT:FBK) Is Paying Out A Larger Dividend Than Last Year

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 22nd of May to €0.69. Based on this payment, the dividend yield for the company will be 5.2%, which is fairly typical for the industry.

See our latest analysis for FinecoBank Banca Fineco

FinecoBank Banca Fineco's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

FinecoBank Banca Fineco has a good history of paying out dividends, with its current track record at 9 years. Based on FinecoBank Banca Fineco's last earnings report, the payout ratio is at a decent 58%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to grow by 5.5% over the next 3 years. The future payout ratio over that same time horizon is estimated by analysts to be 78% which is a bit high but can definitely be sustainable.

FinecoBank Banca Fineco's Dividend Has Lacked Consistency

FinecoBank Banca Fineco has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of €0.20 in 2015 to the most recent total annual payment of €0.69. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. 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

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. FinecoBank Banca Fineco has impressed us by growing EPS 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.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think FinecoBank Banca Fineco's payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments FinecoBank Banca Fineco has been making. We don't think FinecoBank Banca Fineco is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for FinecoBank Banca Fineco you should be aware of, and 1 of them makes us a bit uncomfortable. 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.