DWS Group GmbH KGaA's (ETR:DWS) Dividend Will Be Increased To €2.05
DWS Group GmbH & Co. KGaA (ETR:DWS) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of June to €2.05. This will take the annual payment to 6.9% of the stock price, which is above what most companies in the industry pay.
View our latest analysis for DWS Group GmbH KGaA
DWS Group GmbH KGaA'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 comfortably covered by DWS Group GmbH KGaA's earnings, but it was a bit tighter on the cash flow front. The business is earning enough to make the dividend feasible, but the cash payout ratio of 85% indicates it is more focused on returning cash to shareholders than growing the business.
The next year is set to see EPS grow by 35.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 57% by next year, which is in a pretty sustainable range.
DWS Group GmbH KGaA Is Still Building Its Track Record
Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2019, the annual payment back then was €1.37, compared to the most recent full-year payment of €2.05. This means that it has been growing its distributions at 11% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. DWS Group GmbH KGaA hasn't seen much change in its earnings per share over the last five years.
Our Thoughts On DWS Group GmbH KGaA's Dividend
Overall, we always like to see the dividend being raised, but we don't think DWS Group GmbH KGaA will make a great income stock. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments DWS Group GmbH KGaA has been making. This company is not in the top tier of income providing stocks.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for DWS Group GmbH KGaA that investors should know about before committing capital to this stock. Is DWS Group GmbH KGaA 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.
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