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

Powszechny Zaklad Ubezpieczen SA (WSE:PZU) has announced that it will be increasing its dividend from last year's comparable payment on the 8th of October to PLN4.34. This takes the dividend yield to 9.0%, which shareholders will be pleased with.

Check out our latest analysis for Powszechny Zaklad Ubezpieczen

Powszechny Zaklad Ubezpieczen's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by Powszechny Zaklad Ubezpieczen's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 13.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 64% by next year, which is in a pretty sustainable range.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of PLN4.00 in 2014 to the most recent total annual payment of PLN4.34. Dividend payments have grown at less than 1% a year over this period. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.

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. It's encouraging to see that Powszechny Zaklad Ubezpieczen has been growing its earnings per share at 9.2% a year over the past five years. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

We Really Like Powszechny Zaklad Ubezpieczen's Dividend

Overall, a dividend increase is always good, and we think that Powszechny Zaklad Ubezpieczen 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 of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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.