Unipol Assicurazioni (BIT:UNI) Has Announced That It Will Be Increasing Its Dividend To €0.85

Unipol Assicurazioni S.p.A. (BIT:UNI) has announced that it will be increasing its dividend from last year's comparable payment on the 21st of May to €0.85. The payment will take the dividend yield to 4.9%, which is in line with the average for the industry.

Our free stock report includes 2 warning signs investors should be aware of before investing in Unipol Assicurazioni. Read for free now.

Unipol Assicurazioni's Projected Earnings Seem Likely To Cover Future Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, Unipol Assicurazioni's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 26.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 52% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Unipol Assicurazioni

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was €0.17, 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 17% over that duration. Unipol Assicurazioni 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.

Dividend Growth May Be Hard To Achieve

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. Earnings per share has been crawling upwards at 3.0% per year. The company has been growing at a pretty soft 3.0% per annum, and is paying out quite a lot of its earnings to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

Our Thoughts On Unipol Assicurazioni's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Unipol Assicurazioni that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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