Yahoo Finance Bayerische Motoren Werke (ETR:BMW) Is Reducing Its Dividend To €6.00
Bayerische Motoren Werke Aktiengesellschaft (ETR:BMW) has announced that on 21st of May, it will be paying a dividend of€6.00, which a reduction from last year's comparable dividend. 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.
Check out our latest analysis for Bayerische Motoren Werke
Bayerische Motoren Werke's Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, prior to this announcement, Bayerische Motoren Werke's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to fall by 2.4% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 38%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business 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 dividend has gone from an annual total of €2.60 in 2014 to the most recent total annual payment of €6.00. This means that it has been growing its distributions at 8.7% per annum over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Bayerische Motoren Werke has seen EPS rising for the last five years, at 11% per annum. Bayerische Motoren Werke definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Bayerische Motoren Werke's Dividend
It is generally not great to see the dividend being cut, but we don't think this should happen much if at all in the future given that Bayerische Motoren Werke has the makings of a solid income stock moving forward. Reducing the amount it is paying as a dividend can protect the company's balance sheet, keeping the dividend sustainable for longer. Taking this all into consideration, this looks like it could be a good dividend opportunity.
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 identified 4 warning signs for Bayerische Motoren Werke (2 make us uncomfortable!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
