Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna (WSE:PKO) Has Announced That It Will Be Increasing Its Dividend To PLN5.48

The board of Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna (WSE:PKO) has announced that it will be increasing its dividend by 112% on the 14th of August to PLN5.48, up from last year's comparable payment of PLN2.59. This takes the annual payment to 3.4% of the current stock price, which is about average for the industry.

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Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna's Dividend Forecasted To Be Well Covered By Earnings

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

Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna's payout ratio of 33% is a good sign as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 22.6% over the next 3 years. Analysts forecast the future payout ratio could be 70% over the same time horizon, which is a number we think the company can maintain.

Check out our latest analysis for Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was PLN0.75 in 2015, and the most recent fiscal year payment was PLN2.59. This means that it has been growing its distributions at 13% per annum 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 Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna has grown earnings per share at 22% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna that investors need to be conscious of moving forward. Is Powszechna Kasa Oszczednosci Bank Polski Spólka Akcyjna not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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