Powszechny Zaklad Ubezpieczen (WSE:PZU) Is Increasing Its Dividend To PLN4.34

Powszechny Zaklad Ubezpieczen SA (WSE:PZU) will increase its dividend on the 8th of October to PLN4.34, which is 81% higher than last year's payment from the same period of PLN2.40. This takes the dividend yield to 4.3%, which shareholders will be pleased with.

Check out our latest analysis for Powszechny Zaklad Ubezpieczen

Powszechny Zaklad Ubezpieczen's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Powszechny Zaklad Ubezpieczen was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 13.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 63%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was PLN4.00 in 2014, and the most recent fiscal year payment was PLN2.40. Doing the maths, this is a decline of about 5.0% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

We Could See Powszechny Zaklad Ubezpieczen's Dividend Growing

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Powszechny Zaklad Ubezpieczen has impressed us by growing EPS at 9.2% 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.

We Really Like Powszechny Zaklad Ubezpieczen'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. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Powszechny Zaklad Ubezpieczen that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.