Bayerische Motoren Werke's (ETR:BMW) Dividend Will Be Reduced To €6.00
Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) is reducing its dividend from last year's comparable payment to €6.00 on the 20th of May. This means that the annual payment will be 5.6% of the current stock price, which is in line with the average for the industry.
See our latest analysis for Bayerische Motoren Werke
Bayerische Motoren Werke's Dividend Is Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much. However, Bayerische Motoren Werke's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to fall by 3.4% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 38%, which is comfortable for the company to continue in the future.
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 €2.60 in 2014, and the most recent fiscal year payment was €6.00. This implies that the company grew its distributions at a yearly rate of about 8.7% over that duration. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Bayerische Motoren Werke might have put its house in order since then, but we remain cautious.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Bayerische Motoren Werke has impressed us by growing EPS at 11% per year over the past five years. Bayerische Motoren Werke definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Bayerische Motoren Werke Looks Like A Great Dividend Stock
Overall, we think that Bayerische Motoren Werke could be a great option for a dividend investment, although we would have preferred if the dividend wasn't cut this year. The cut will allow the company to continue paying out the dividend without putting the balance sheet under pressure, which means that it could remain sustainable for longer. 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. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for Bayerische Motoren Werke (of which 2 are concerning!) you should know about. Is Bayerische Motoren Werke not quite the opportunity you were looking for? Why not check out our selection of top 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.
