Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien (ETR:BVB) Has Affirmed Its Dividend Of €0.06

The board of Borussia Dortmund GmbH & Co. Kommanditgesellschaft auf Aktien (ETR:BVB) has announced that it will pay a dividend on the 27th of November, with investors receiving €0.06 per share. The dividend yield will be 1.7% based on this payment which is still above the industry average.

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Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's Payment Could Potentially Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien's dividend was making up a very large proportion of earnings, and the company was also not generating any cash flow to offset this. Generally, we think that this would be a risky long term practice.

The next year is set to see EPS grow by 97.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 51%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

View our latest analysis for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was €0.10, compared to the most recent full-year payment of €0.06. Doing the maths, this is a decline of about 5.0% per year. A company that decreases its dividend over time generally isn't what we are looking for.

Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien Might Find It Hard To Grow Its 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. We are encouraged to see that Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien has grown earnings per share at 63% per year over the past five years. However, Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for Borussia Dortmund GmbH Kommanditgesellschaft auf Aktien (1 shouldn't be ignored!) that you should be aware of before investing. 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.