Nova Ljubljanska Banka d.d (LJSE:NLBR) Is Paying Out A Larger Dividend Than Last Year

Nova Ljubljanska Banka d.d. (LJSE:NLBR) has announced that it will be increasing its periodic dividend on the 24th of June to €6.43, which will be 17% higher than last year's comparable payment amount of €5.50. This will take the dividend yield to an attractive 8.4%, providing a nice boost to shareholder returns.

Our free stock report includes 1 warning sign investors should be aware of before investing in Nova Ljubljanska Banka d.d. Read for free now.

Nova Ljubljanska Banka d.d's Payment Expected To Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Nova Ljubljanska Banka d.d has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Based on Nova Ljubljanska Banka d.d's last earnings report, the payout ratio is at a decent 37%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to fall by 0.9%. Fortunately, analysts forecast the future payout ratio to be 55% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Nova Ljubljanska Banka d.d

Nova Ljubljanska Banka d.d's Dividend Has Lacked Consistency

It's comforting to see that Nova Ljubljanska Banka d.d has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The annual payment during the last 6 years was €7.13 in 2019, and the most recent fiscal year payment was €11.00. This means that it has been growing its distributions at 7.5% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Nova Ljubljanska Banka d.d might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Nova Ljubljanska Banka d.d has impressed us by growing EPS at 22% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Nova Ljubljanska Banka d.d's Dividend

Overall, a dividend increase is always good, and we think that Nova Ljubljanska Banka d.d is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Nova Ljubljanska Banka d.d 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.