Van Lanschot Kempen (AMS:VLK) Is Increasing Its Dividend To €2.75

The board of Van Lanschot Kempen NV (AMS:VLK) has announced that it will be paying its dividend of €2.75 on the 3rd of June, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 8.7%, providing a nice boost to shareholder returns.

View our latest analysis for Van Lanschot Kempen

Van Lanschot Kempen'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.

Van Lanschot Kempen has a short history of paying out dividends, with its current track record at only 4 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.

EPS is set to grow by 33.4% over the next 3 years. Likewise, analysts forecast that the future payout ratio could reach 88% over that same time period. This is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

Van Lanschot Kempen Is Still Building Its Track Record

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. The annual payment during the last 4 years was €0.70 in 2021, and the most recent fiscal year payment was €4.00. This means that it has been growing its distributions at 55% per annum 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 who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Over the past five years, it looks as though Van Lanschot Kempen's EPS has declined at around 57% a year. 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. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Van Lanschot Kempen's payments are rock solid. The track record isn't great, and the payments are a bit high to be considered sustainable. We don't think Van Lanschot Kempen is a great stock to add to your portfolio if income is your focus.

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. Are management backing themselves to deliver performance? Check their shareholdings in Van Lanschot Kempen in our latest insider ownership analysis. 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.