UPDATE 1-Henkel ups dividend payout as deals prove elusive

Tue Jan 21, 2014 4:03am EST

* Dividend payout ratio to be around 30 pct for 2013

* Previous ratio had been around 25 pct

* CEO says few attractive takeover targets at present

* Shares rise 1.1 pct (Adds comment on acquisitions, shares, background)

FRANKFURT, Jan 21 (Reuters) - German adhesives and detergents maker Henkel plans to pay out more of its profits to shareholders in dividends as earnings improve and takeover targets prove hard to find.

The maker of Persil laundry detergent and Loctite glues said on Tuesday its future dividend payout ratio would be 25-35 percent of adjusted net income, instead of about 25 percent now.

For 2013, it would propose a dividend payout ratio of about 30 percent, it added.

Shares in the group were up 1.1 percent at 0845 GMT, outperforming a 0.3 percent gain for Germany's benchmark Dax index as investors welcomed the prospect of a higher payout.

But some analysts said the plan also showed the difficulties of finding appropriate acquisitions to fuel growth.

"The decision to use more cash for dividends means less than 100 percent focus on external growth as targets (at an appropriate price) are likely difficult to find," Equinet analyst Nadeshda Demidova wrote in a note.

Henkel, whose last major acquisition was that of National Starch in 2008 for 3.7 billion euros ($5 billion) to expand its adhesives division, has been on the hunt for deals for over a year and has said it has around 4 billion euros available.

But suitable targets have not been easy to find, Chief Executive Kasper Rorsted told a paper on Monday, echoing comments he made at the end of 2013.

"There are few attractive opportunities on the market at present," Rorsted was quoted as saying by Frankfurter Allgemeine Zeitung. "But there will be interesting possibilities in the next few years."

Henkel paid a dividend of 0.95 euros per preferred share for 2012. Analysts were expecting a 2013 payout of about 1.05 per share before Tuesday's statement, according to Thomson Reuters data.

"Our significantly increased profitability and financial strength allow us to increase the dividend payout ratio without impacting our strategic flexibility and our conservative financial strategy," Rorsted said in a statement.

Henkel is due to release full-year results on Feb. 20. It expects an adjusted EBIT margin - earnings before interest and tax as a percentage of sales - of about 15 percent for the year.

($1 = 0.7373 euros) (Reporting by Victoria Bryan and Ludwig Burger; Editing by Mark Potter)