Arbuthnot Banking Group's (LON:ARBB) Dividend Will Be Increased To £0.19
Arbuthnot Banking Group PLC's (LON:ARBB) dividend will be increasing from last year's payment of the same period to £0.19 on 22nd of September. This takes the annual payment to 4.6% of the current stock price, which is about average for the industry.
View our latest analysis for Arbuthnot Banking Group
Arbuthnot Banking Group's Payment Expected To Have Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time.
Arbuthnot Banking Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Arbuthnot Banking Group's payout ratio sits at 20%, an extremely comfortable number that shows that it can pay its dividend.
Looking forward, EPS is forecast to rise by 2.5% over the next 3 years. Analysts estimate the future payout ratio will be 24% over the same time period, 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. The dividend has gone from an annual total of £0.25 in 2013 to the most recent total annual payment of £0.44. This implies that the company grew its distributions at a yearly rate of about 5.8% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Arbuthnot Banking Group has grown earnings per share at 124% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
We Really Like Arbuthnot Banking Group's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 3 warning signs for Arbuthnot Banking Group that you should be aware of before investing. Is Arbuthnot Banking Group 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.
