Bendigo and Adelaide Bank (ASX:BEN) Has Announced That It Will Be Increasing Its Dividend To A$0.32

Simply Wall St

Wed, Aug 30, 2023, 10:22 PM 3 min read

Bendigo and Adelaide Bank's Payment Expected To Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Bendigo and Adelaide Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Bendigo and Adelaide Bank's last earnings report, the payout ratio is at a decent 69%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 2.0% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 70% over the same time period, which is in a pretty comfortable range.

historic-dividend — ASX:BEN Historic Dividend August 31st 2023

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 A$0.60 in 2013 to the most recent total annual payment of A$0.64. Dividend payments have grown at less than 1% a year over this period. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Bendigo and Adelaide Bank May Find It Hard To Grow The Dividend

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. Although it's important to note that Bendigo and Adelaide Bank's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Bendigo and Adelaide Bank will make a great income stock. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Bendigo and Adelaide Bank has been making. We don't think Bendigo and Adelaide Bank is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Bendigo and Adelaide Bank that investors should know about before committing capital to this stock. 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.