Powszechny Zaklad Ubezpieczen (WSE:PZU) Is Paying Out A Larger Dividend Than Last Year

The board of Powszechny Zaklad Ubezpieczen SA (WSE:PZU) has announced that it will be paying its dividend of PLN4.34 on the 8th of October, an increased payment from last year's comparable dividend. This takes the dividend yield to 9.1%, which shareholders will be pleased with.

View our latest analysis for Powszechny Zaklad Ubezpieczen

Powszechny Zaklad Ubezpieczen's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Powszechny Zaklad Ubezpieczen's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 13.3%. 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. Since 2014, the annual payment back then was PLN4.00, compared to the most recent full-year payment of PLN4.34. Its dividends have grown at less than 1% per annum over this time frame. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

Powszechny Zaklad Ubezpieczen Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Powszechny Zaklad Ubezpieczen has seen EPS rising for the last five years, at 9.2% per annum. 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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. 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 1 warning sign for Powszechny Zaklad Ubezpieczen that investors need to be conscious of moving forward. 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.

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