Yahoo Finance EFG International (VTX:EFGN) Is Increasing Its Dividend To CHF0.45
EFG International AG (VTX:EFGN) will increase its dividend from last year's comparable payment on the 27th of April to CHF0.45. This will take the dividend yield to an attractive 4.9%, providing a nice boost to shareholder returns.
See our latest analysis for EFG International
EFG International's Payment Expected To Have Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much.
EFG International has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on EFG International's last earnings report, the payout ratio is at a decent 61%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, earnings per share could rise by 53.6% over the next year if the trend from the last few years continues. And analysts also estimate the future payout ratio to be at 55% n 3 years, 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 annual payment during the last 10 years was CHF0.10 in 2013, and the most recent fiscal year payment was CHF0.45. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. EFG International has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
The Dividend Looks Likely To Grow
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that EFG International has grown earnings per share at 54% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
EFG International Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for EFG International that you should be aware of before investing. Is EFG International 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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