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. Based on this payment, the dividend yield for the company will be 5.3%, which is fairly typical for the industry.

Check out our latest analysis for DBS Group Holdings

DBS Group Holdings' Earnings Will Easily Cover The Distributions

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

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%. Analysts estimate the future payout ratio could reach 77% over that same time period, which is on the higher side, but certainly still feasible.

SGX:D05 Historic Dividend February 12th 2025

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was SGD0.546 in 2015, and the most recent fiscal year payment was SGD2.40. This means that it has been growing its distributions at 16% per annum over that time. DBS Group Holdings has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that DBS Group Holdings has grown earnings per share at 12% per 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

Overall, a dividend increase is always good, and we think that DBS Group Holdings is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

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. As an example, we've identified 1 warning sign for DBS Group Holdings that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.