DB Insurance's (KRX:005830) Dividend Will Be Increased To ₩6800.00

The board of DB Insurance Co., Ltd. (KRX:005830) has announced that it will be increasing its dividend by 28% on the 1st of January to ₩6800.00, up from last year's comparable payment of ₩5300.00. This will take the annual payment to 5.8% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for DB Insurance

DB Insurance's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, DB Insurance's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to fall by 4.9% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 28%, which we are pretty comfortable with and we think is feasible on an earnings basis.

DB Insurance Is Still Building Its Track Record

It is great to see that DB Insurance has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 5 years was ₩1500.00 in 2020, and the most recent fiscal year payment was ₩5300.00. This means that it has been growing its distributions at 29% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that DB Insurance has grown earnings per share at 40% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

DB Insurance Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 13 DB Insurance analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is DB Insurance not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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