Is It Smart To Buy Terveystalo Oyj (HEL:TTALO) Before It Goes Ex-Dividend?

Readers hoping to buy Terveystalo Oyj (HEL:TTALO) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 3rd of April to receive the dividend, which will be paid on the 15th of April.

Terveystalo Oyj’s next dividend payment will be €0.13 per share. Last year, in total, the company distributed €0.26 to shareholders. Calculating the last year’s worth of payments shows that Terveystalo Oyj has a trailing yield of 3.2% on the current share price of €8.13. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Terveystalo Oyj can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Terveystalo Oyj

If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Terveystalo Oyj paid out 61% of its earnings to investors last year, a normal payout level for most businesses.

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

HLSE:TTALO Historical Dividend Yield April 1st 2020
HLSE:TTALO Historical Dividend Yield April 1st 2020

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That’s why it’s comforting to see Terveystalo Oyj’s earnings have been skyrocketing, up 52% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Terveystalo Oyj has delivered an average of 108% per year annual increase in its dividend, based on the past two years of dividend payments. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Should investors buy Terveystalo Oyj for the upcoming dividend? Earnings per share are growing nicely, and Terveystalo Oyj is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Terveystalo Oyj looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while Terveystalo Oyj looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we’ve spotted 4 warning signs for Terveystalo Oyj you should know about.

We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.