Banca Mediolanum (BIT:BMED) Has Affirmed Its Dividend Of €0.24

The board of Banca Mediolanum S.p.A. (BIT:BMED) has announced that it will pay a dividend of €0.24 per share on the 23rd of November. Based on this payment, the dividend yield on the company's stock will be 5.8%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Banca Mediolanum

Banca Mediolanum's Payment Expected To Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Banca Mediolanum has a good history of paying out dividends, with its current track record at 7 years. Using data from its latest earnings report, Banca Mediolanum's payout ratio sits at 25%, an extremely comfortable number that shows that it can pay its dividend.

Over the next 3 years, EPS is forecast to expand by 42.7%. Analysts forecast the future payout ratio could be 57% over the same time horizon, which is a number we think the company can maintain.

Banca Mediolanum's Dividend Has Lacked Consistency

It's comforting to see that Banca Mediolanum has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the annual payment back then was €0.28, compared to the most recent full-year payment of €0.46. This implies that the company grew its distributions at a yearly rate of about 7.3% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Banca Mediolanum might have put its house in order since then, but we remain cautious.

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. Banca Mediolanum has seen EPS rising for the last five years, at 13% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Banca Mediolanum's prospects of growing its dividend payments in the future.

We Really Like Banca Mediolanum's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Banca Mediolanum that investors should take into consideration. Is Banca Mediolanum 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.