Absolent Air Care Group (STO:ABSO) Will Pay A Larger Dividend Than Last Year At SEK3.00

Absolent Air Care Group AB (publ) (STO:ABSO) will increase its dividend from last year's comparable payment on the 23rd of May to SEK3.00. Even though the dividend went up, the yield is still quite low at only 0.9%.

View our latest analysis for Absolent Air Care Group

Absolent Air Care Group's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Absolent Air Care Group was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 55.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

Absolent Air Care Group's Dividend Has Lacked Consistency

Absolent Air Care Group has been paying dividends for a while, but the track record isn't stellar. This suggests that the dividend might not be the most reliable. The annual payment during the last 9 years was SEK0.60 in 2015, and the most recent fiscal year payment was SEK3.00. This implies that the company grew its distributions at a yearly rate of about 20% 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.

We Could See Absolent Air Care Group's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Absolent Air Care Group has grown earnings per share at 7.6% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Absolent Air Care Group's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Absolent Air Care Group stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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