FinecoBank Banca Fineco's (BIT:FBK) Dividend Will Be Increased To €0.74

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 21st of May to €0.74. Even though the dividend went up, the yield is still quite low at only 4.1%.

View our latest analysis for FinecoBank Banca Fineco

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

FinecoBank Banca Fineco has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on FinecoBank Banca Fineco's last earnings report, the payout ratio is at a decent 68%, 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 5.3%. Analysts forecast the future payout ratio could be 74% over the same time horizon, which is a number we think the company can maintain.

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. The dividend has gone from an annual total of €0.20 in 2015 to the most recent total annual payment of €0.74. This means that it has been growing its distributions at 14% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. FinecoBank Banca Fineco has impressed us by growing EPS at 18% 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.

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. While FinecoBank Banca Fineco is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. 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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