Voss Veksel- og Landmandsbank's (OB:VVL) Upcoming Dividend Will Be Larger Than Last Year's

Voss Veksel- og Landmandsbank ASA (OB:VVL) has announced that it will be increasing its periodic dividend on the 9th of May to NOK16.50, which will be 17% higher than last year's comparable payment amount of NOK14.10. Despite this raise, the dividend yield of 4.2% is only a modest boost to shareholder returns.

See our latest analysis for Voss Veksel- og Landmandsbank

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

If it is predictable over a long period, even low dividend yields can be attractive.

Voss Veksel- og Landmandsbank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Voss Veksel- og Landmandsbank's payout ratio of 34% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 8.7%. Analysts forecast the future payout ratio could be 40% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of NOK5.00 in 2015 to the most recent total annual payment of NOK14.10. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Voss Veksel- og Landmandsbank has grown earnings per share at 14% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Voss Veksel- og Landmandsbank's Dividend

Overall, a dividend increase is always good, and we think that Voss Veksel- og Landmandsbank is a strong income stock thanks to its track record and growing earnings. 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.