Van Lanschot Kempen (AMS:VLK) Is Due To Pay A Dividend Of €2.00

Van Lanschot Kempen NV (AMS:VLK) has announced that it will pay a dividend of €2.00 per share on the 4th of June. This makes the dividend yield 5.5%, which is above the industry average.

See our latest analysis for Van Lanschot Kempen

Van Lanschot Kempen's Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Van Lanschot Kempen has a short history of paying out dividends, with its current track record at only 3 years. Taking data from Van Lanschot Kempen's last earnings report, the payout ratio is at a decent 88%, meaning that the company is able to pay out its dividend with some room to spare.

Over the next 3 years, EPS is forecast to expand by 51.7%. Despite the current payout ratio being slightly elevated, analysts estimate the future payout ratio will be 71% over the same time period, which would make us comfortable with the sustainability of the dividend.

Van Lanschot Kempen Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2021, the annual payment back then was €0.70, compared to the most recent full-year payment of €1.75. This works out to be a compound annual growth rate (CAGR) of approximately 36% a year over that time. Van Lanschot Kempen has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Van Lanschot Kempen's earnings per share has shrunk at 57% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

The Dividend Could Prove To Be Unreliable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 3 warning signs for Van Lanschot Kempen that investors should take into consideration. Is Van Lanschot Kempen 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.