Bendigo and Adelaide Bank Limited (ASX:BEN) will pay a dividend of A$0.30 on the 31st of March. Based on this payment, the dividend yield will be 5.7%, which is fairly typical for the industry.

Check out our latest analysis for Bendigo and Adelaide Bank

Bendigo and Adelaide Bank's Payment Expected To Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time.

Bendigo and Adelaide Bank 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 Bendigo and Adelaide Bank's payout ratio of 74% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 3.8%. The future payout ratio could be 72% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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 A$0.66, compared to the most recent full-year payment of A$0.63. Dividend payments have shrunk at a rate of less than 1% per annum over this time frame. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

We Could See Bendigo and Adelaide Bank's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Bendigo and Adelaide Bank has been growing its earnings per share at 5.4% a year over the past five years. Recently, the company has been able to grow earnings at a decent rate, but with the payout ratio on the higher end we don't think the dividend has many prospects for growth.

In Summary

Overall, we think Bendigo and Adelaide Bank is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Bendigo and Adelaide Bank that investors need to be conscious of moving forward. Is Bendigo and Adelaide Bank not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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