Per Aarsleff Holding (CPH:PAAL B) Is Increasing Its Dividend To kr.8.00

Per Aarsleff Holding A/S' (CPH:PAAL B) dividend will be increasing to kr.8.00 on 3rd of February. This makes the dividend yield about the same as the industry average at 2.6%.

See our latest analysis for Per Aarsleff Holding

Per Aarsleff Holding's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last payment, Per Aarsleff Holding was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

The next year is set to see EPS grow by 17.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

Per Aarsleff Holding Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The first annual payment during the last 10 years was kr.0.48 in 2012, and the most recent fiscal year payment was kr.8.00. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see Per Aarsleff Holding has been growing its earnings per share at 9.9% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Per Aarsleff Holding's prospects of growing its dividend payments in the future.

Our Thoughts On Per Aarsleff Holding's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Per Aarsleff Holding's payments are rock solid. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Per Aarsleff Holding is a great stock to add to your portfolio if income is your focus.

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. As an example, we've identified 1 warning sign for Per Aarsleff Holding that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.