Banca Finnat Euramerica S.p.A. (BIT:BFE) is a true Dividend Rock Star. Its yield of 8.8% makes it one of the market’s top dividend payer. In the past ten years, Banca Finnat Euramerica has also grown its dividend from €0.020 to €0.030. Below, I have outlined more attractive dividend aspects for Banca Finnat Euramerica for income investors who may be interested in new dividend stocks for their portfolio.
Check out our latest analysis for Banca Finnat Euramerica
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What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
- It is paying an annual yield above 75% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its dividend per share amount has increased over the past
- It can afford to pay the current rate of dividends from its earnings
- It has the ability to keep paying its dividends going forward
High Yield And Dependable
Banca Finnat Euramerica currently yields 8.8%, which is high for Capital Markets stocks. But the real reason Banca Finnat Euramerica stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of BFE it has increased its DPS from €0.020 to €0.030 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
The current trailing twelve-month payout ratio for the stock is 37%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect BFE’s payout to increase to 57% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.9%. However, EPS is forecasted to fall to €0.010 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
Next Steps:
There aren’t many other stocks out there with the same track record as Banca Finnat Euramerica, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three essential aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for BFE’s future growth? Take a look at our free research report of analyst consensus for BFE’s outlook.
- Valuation: What is BFE worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BFE is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.