Deutsche Bank's (ETR:DBK) Upcoming Dividend Will Be Larger Than Last Year's

Deutsche Bank Aktiengesellschaft's (ETR:DBK) dividend will be increasing from last year's payment of the same period to €0.45 on 21st of May. This takes the annual payment to 3.0% of the current stock price, which is about average for the industry.

See our latest analysis for Deutsche Bank

Deutsche Bank's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Having distributed dividends for at least 10 years, Deutsche Bank has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Deutsche Bank's latest earnings report puts its payout ratio at 21%, showing that the company can pay out its dividends comfortably.

Looking forward, EPS is forecast to rise by 26.2% over the next 3 years. Analysts forecast the future payout ratio could be 38% over the same time horizon, which is a number we think the company can maintain.

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 €0.75 in 2014 to the most recent total annual payment of €0.45. This works out to be a decline of approximately 5.0% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

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. It's encouraging to see that Deutsche Bank has been growing its earnings per share at 170% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Deutsche Bank Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Deutsche Bank that investors need to be conscious of moving forward. 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.