Powszechny Zaklad Ubezpieczen's (WSE:PZU) Dividend Will Be Increased To PLN4.34

Powszechny Zaklad Ubezpieczen SA (WSE:PZU) will increase its dividend from last year's comparable payment on the 8th of October to PLN4.34. This will take the annual payment to 8.9% of the stock price, which is above what most companies in the industry pay.

See 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 indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 13.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 64%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was PLN4.00, compared to the most recent full-year payment of PLN4.34. Dividend payments have grown at less than 1% a year over this period. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

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. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

Powszechny Zaklad Ubezpieczen Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

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. As an example, we've identified 1 warning sign for Powszechny Zaklad Ubezpieczen that you should be aware of before investing. 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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