Voss Veksel- og Landmandsbank (OB:VVL) Has Announced That It Will Be Increasing Its Dividend To NOK16.50

Voss Veksel- og Landmandsbank ASA (OB:VVL) has announced that it will be increasing its dividend from last year's comparable payment on the 9th of May to NOK16.50. This makes the dividend yield about the same as the industry average at 4.9%.

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Voss Veksel- og Landmandsbank's Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Having distributed dividends for at least 10 years, Voss Veksel- og Landmandsbank has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 34%, which means that Voss Veksel- og Landmandsbank would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 8.7% over the next 3 years. The future payout ratio could be 40% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Check out our latest analysis for Voss Veksel- og Landmandsbank

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the dividend has gone from NOK5.00 total annually to NOK16.50. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Voss Veksel- og Landmandsbank has grown earnings per share at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Voss Veksel- og Landmandsbank's prospects of growing its dividend payments in the future.

We Really Like Voss Veksel- og Landmandsbank's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Voss Veksel- og Landmandsbank that investors should take into consideration. 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.