Aktia Pankki Oyj (HEL:AKTIA) Has Announced That Its Dividend Will Be Reduced To €0.43

Aktia Pankki Oyj (HEL:AKTIA) has announced that on 18th of April, it will be paying a dividend of€0.43, which a reduction from last year's comparable dividend. This means that the annual payment will be 4.5% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Aktia Pankki Oyj

Aktia Pankki Oyj's Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Aktia Pankki Oyj has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Based on Aktia Pankki Oyj's last earnings report, the payout ratio is at a decent 60%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 94.1%. The future payout ratio could be 69% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Aktia Pankki Oyj's Dividend Has Lacked Consistency

It's comforting to see that Aktia Pankki Oyj has been paying a dividend for a number of years now, however it has been cut at least once in that time. 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 9 years was €0.42 in 2014, and the most recent fiscal year payment was €0.43. Dividend payments have grown at less than 1% a year over this period. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Earnings has been rising at 4.5% per annum over the last five years, which admittedly is a bit slow. The company has been growing at a pretty soft 4.5% per annum, and is paying out quite a lot of its earnings to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

In Summary

Even though the dividend was cut this year, we think Aktia Pankki Oyj has the ability to make consistent payments in the future. 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.

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. For example, we've identified 2 warning signs for Aktia Pankki Oyj (1 is potentially serious!) that you should be aware of before investing. 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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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.