Van Lanschot Kempen (AMS:VLK) Will Pay A Larger Dividend Than Last Year At €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 7.4%, providing a nice boost to shareholder returns.

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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. Based on Van Lanschot Kempen's last earnings report, calculating for its payout ratio equates to 88%, which means that the company covered its last dividend with comfortable room to spare.

EPS is forecast to rise by 24.9% over the next 3 years. The future payout ratio over that same time horizon is estimated by analysts to be 92% which is a bit high but can definitely be sustainable.

View our latest analysis for Van Lanschot Kempen

Van Lanschot Kempen Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2021, the dividend has gone from €0.70 total annually to €4.15. This means that it has been growing its distributions at 56% 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Van Lanschot Kempen's EPS has fallen by approximately 58% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. 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 payments are bit high to be considered sustainable, and the track record isn't the best. We would probably look elsewhere for an income investment.

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. As an example, we've identified 1 warning sign for Van Lanschot Kempen that you should be aware of before investing. 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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