DNB Bank (OB:DNB) Will Pay A Larger Dividend Than Last Year At NOK12.50

DNB Bank ASA's (OB:DNB) periodic dividend will be increasing on the 5th of May to NOK12.50, with investors receiving 28% more than last year's NOK9.75. Based on this payment, the dividend yield for the company will be 5.1%, which is fairly typical for the industry.

View our latest analysis for DNB Bank

DNB Bank's Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Given that this is the first year that DNB Bank is paying out a dividend, we are not yet able to make an analysis based on the company's dividend paying history. Diving into the company's earnings report, the payout ratio is set at 54%, which is a decent ratio of dividend payment to earnings, and may sustain future dividends if the company stays at its current trend.

Looking forward, EPS is forecast to rise by 21.2% over the next 3 years. Analysts forecast the future payout ratio could be 64% over the same time horizon, which is a number we think the company can maintain.

DNB Bank Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

We Could See DNB Bank's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that DNB Bank has grown earnings per share at 8.0% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

DNB Bank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that DNB Bank is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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 1 warning sign for DNB Bank 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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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.