AS Tallinna Sadam (TAL:TSM1T) Is Due To Pay A Dividend Of €0.073

The board of AS Tallinna Sadam (TAL:TSM1T) has announced that it will pay a dividend on the 16th of May, with investors receiving €0.073 per share. This makes the dividend yield 6.1%, which will augment investor returns quite nicely.

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AS Tallinna Sadam's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, the company was paying out 108% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Looking forward, earnings per share is forecast to rise by 32.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 61%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

View our latest analysis for AS Tallinna Sadam

AS Tallinna Sadam's Dividend Has Lacked Consistency

Looking back, AS Tallinna Sadam's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 6 years was €0.134 in 2019, and the most recent fiscal year payment was €0.073. Doing the maths, this is a decline of about 9.6% per year. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth Potential Is Shaky

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. AS Tallinna Sadam's earnings per share has shrunk at 15% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

We're Not Big Fans Of AS Tallinna Sadam's Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help AS Tallinna Sadam make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, this doesn't get us very excited from an income standpoint.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for AS Tallinna Sadam that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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