SpareBank 1 SMN (OB:MING) Has Announced That It Will Be Increasing Its Dividend To NOK12.50

SpareBank 1 SMN's (OB:MING) dividend will be increasing from last year's payment of the same period to NOK12.50 on 28th of March. This makes the dividend yield 7.1%, which is above the industry average.

Check out our latest analysis for SpareBank 1 SMN

SpareBank 1 SMN's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

SpareBank 1 SMN has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 61%, which means that SpareBank 1 SMN would be able to pay its last dividend without pressure on the balance sheet.

Over the next 3 years, EPS is forecast to fall by 7.3%. Despite that, analysts estimate the future payout ratio could be 65% over the same time period, which is in a pretty comfortable range.

SpareBank 1 SMN Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was NOK1.75 in 2015, and the most recent fiscal year payment was NOK12.50. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that SpareBank 1 SMN has grown earnings per share at 11% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. The company is paying out quite a high portion of earnings, but with those earnings growing quickly, this might resolve itself eventually. If earnings do fall over the next 12 months, the dividend could come under pressure, but we don't think it should cause too much of a problem in the long term. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for SpareBank 1 SMN for free with public analyst estimates for the company. 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.