Australia markets closed
  • ALL ORDS

    7,709.50
    +21.50 (+0.28%)
     
  • ASX 200

    7,493.80
    +25.50 (+0.34%)
     
  • AUD/USD

    0.7102
    -0.0016 (-0.22%)
     
  • OIL

    81.28
    +0.27 (+0.33%)
     
  • GOLD

    1,924.90
    -5.10 (-0.26%)
     
  • BTC-AUD

    32,373.88
    -278.76 (-0.85%)
     
  • CMC Crypto 200

    520.60
    -6.59 (-1.25%)
     
  • AUD/EUR

    0.6528
    -0.0001 (-0.02%)
     
  • AUD/NZD

    1.0948
    -0.0013 (-0.12%)
     
  • NZX 50

    12,036.05
    +12.59 (+0.10%)
     
  • NASDAQ

    12,051.48
    +236.79 (+2.00%)
     
  • FTSE

    7,761.11
    +16.24 (+0.21%)
     
  • Dow Jones

    33,949.41
    +205.57 (+0.61%)
     
  • DAX

    15,132.85
    +51.21 (+0.34%)
     
  • Hang Seng

    22,628.57
    +61.79 (+0.27%)
     
  • NIKKEI 225

    27,382.56
    +19.81 (+0.07%)
     

Australia and New Zealand Banking Group's (ASX:ANZ) Shareholders Will Receive A Bigger Dividend Than Last Year

Australia and New Zealand Banking Group Limited (ASX:ANZ) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of December to A$0.74. This takes the dividend yield to 5.9%, which shareholders will be pleased with.

See our latest analysis for Australia and New Zealand Banking Group

Australia and New Zealand Banking Group's Dividend Forecasted To Be Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Australia and New Zealand Banking Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Australia and New Zealand Banking Group's last earnings report, the payout ratio is at a decent 58%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to fall by 3.0%. Fortunately, analysts forecast the future payout ratio to be 69% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of A$1.40 in 2012 to the most recent total annual payment of A$1.48. Its dividends have grown at less than 1% per annum over this time frame. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Australia and New Zealand Banking Group hasn't seen much change in its earnings per share over the last five years. Growth of 1.9% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This could mean the dividend doesn't have the growth potential we look for going into the future.

Our Thoughts On Australia and New Zealand Banking Group's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Australia and New Zealand Banking Group that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here