Mediobanca Banca di Credito Finanziario's (BIT:MB) Upcoming Dividend Will Be Larger Than Last Year's

Mediobanca Banca di Credito Finanziario S.p.A. (BIT:MB) will increase its dividend from last year's comparable payment on the 22nd of November to €0.85. This makes the dividend yield 7.2%, which is above the industry average.

See our latest analysis for Mediobanca Banca di Credito Finanziario

Mediobanca Banca di Credito Finanziario's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having distributed dividends for at least 10 years, Mediobanca Banca di Credito Finanziario has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Mediobanca Banca di Credito Finanziario's payout ratio of 70% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 26.1%. Analysts forecast the future payout ratio could be 69% 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. Since 2013, the annual payment back then was €0.05, compared to the most recent full-year payment of €0.85. This implies that the company grew its distributions at a yearly rate of about 33% 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.

Mediobanca Banca di Credito Finanziario May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Earnings has been rising at 4.4% per annum over the last five years, which admittedly is a bit slow. Slow growth and a high payout ratio could mean that Mediobanca Banca di Credito Finanziario has maxed out the amount that it has been able to pay to shareholders. That's fine as far as it goes, but we're less enthusiastic as this often signals that the dividend is likely to grow slower in the future.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Mediobanca Banca di Credito Finanziario that you should be aware of before investing. Is Mediobanca Banca di Credito Finanziario 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.