Yahoo Finance Arbuthnot Banking Group (LON:ARBB) Has Announced That It Will Be Increasing Its Dividend To £0.27
Arbuthnot Banking Group PLC's (LON:ARBB) periodic dividend will be increasing on the 31st of May to £0.27, with investors receiving 8.0% more than last year's £0.25. Even though the dividend went up, the yield is still quite low at only 4.1%.
View our latest analysis for Arbuthnot Banking Group
Arbuthnot Banking Group's Earnings Will Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end.
Arbuthnot Banking Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Arbuthnot Banking Group's payout ratio sits at 14%, an extremely comfortable number that shows that it can pay its dividend.
EPS is set to fall by 12.7% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 26% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of £0.25 in 2014 to the most recent total annual payment of £0.44. This means that it has been growing its distributions at 5.8% per annum over that time. 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
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Arbuthnot Banking Group has impressed us by growing EPS at 41% 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.
Arbuthnot Banking Group Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Arbuthnot Banking Group is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for Arbuthnot Banking Group (1 makes us a bit uncomfortable!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
