DBS Group Holdings Ltd (SGX:D05) has announced that it will be increasing its dividend from last year's comparable payment on the 16th of April to SGD0.60. This takes the annual payment to 5.3% of the current stock price, which is about average for the industry.

View our latest analysis for DBS Group Holdings

DBS Group Holdings' Earnings Will Easily Cover The Distributions

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

DBS Group Holdings has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but DBS Group Holdings' payout ratio of 56% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 5.6%. Likewise, analysts forecast that the future payout ratio could reach 78% over that same time period. This is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.SGX:D05 Historic Dividend March 5th 2025

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 SGD0.546 in 2015 to the most recent total annual payment of SGD2.40. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that DBS Group Holdings has been growing its earnings per share at 12% a year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like DBS Group Holdings' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for DBS Group Holdings that investors should know about before committing capital to this stock. Is DBS Group Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.

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