Flughafen Zürich's (VTX:FHZN) Dividend Will Be Increased To CHF5.30

Flughafen Zürich AG (VTX:FHZN) will increase its dividend from last year's comparable payment on the 26th of April to CHF5.30. This makes the dividend yield about the same as the industry average at 2.8%.

See our latest analysis for Flughafen Zürich

Flughafen Zürich's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. The last dividend was quite easily covered by Flughafen Zürich's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 10.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 50% by next year, which is in a pretty sustainable range.

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 CHF1.90 in 2014 to the most recent total annual payment of CHF5.30. This means that it has been growing its distributions at 11% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Flughafen Zürich Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Flughafen Zürich has impressed us by growing EPS at 5.0% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Our Thoughts On Flughafen Zürich's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Flughafen Zürich that you should be aware of before investing. Is Flughafen Zürich not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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