Aktia Pankki Oyj (HEL:AKTIA) Will Pay A Larger Dividend Than Last Year At €0.70

Aktia Pankki Oyj's (HEL:AKTIA) dividend will be increasing from last year's payment of the same period to €0.70 on 12th of April. This makes the dividend yield 7.8%, which is above the industry average.

Check out our latest analysis for Aktia Pankki Oyj

Aktia Pankki Oyj's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having distributed dividends for at least 10 years, Aktia Pankki Oyj has a long history of paying out a part of its 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.

EPS is forecast to rise by 4.8% over the next 3 years. Likewise, analysts forecast that the future payout ratio could reach 85% over that same time period. This is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was €0.42 in 2014, and the most recent fiscal year payment was €0.70. This works out to be a compound annual growth rate (CAGR) of approximately 5.2% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Aktia Pankki Oyj Could Grow Its Dividend

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 Aktia Pankki Oyj has grown earnings per share at 7.4% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Our Thoughts On Aktia Pankki Oyj's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Aktia Pankki Oyj that investors should know about before committing capital to this stock. Is Aktia Pankki Oyj not quite the opportunity you were looking for? Why not check out our selection of top 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.