Ålandsbanken Abp (HEL:ALBAV) Is Increasing Its Dividend To €2.65

The board of Ålandsbanken Abp (HEL:ALBAV) has announced that it will be paying its dividend of €2.65 on the 8th of April, an increased payment from last year's comparable dividend. This takes the dividend yield to 7.4%, which shareholders will be pleased with.

See our latest analysis for Ålandsbanken Abp

Ålandsbanken Abp's Payment Expected To Have Solid Earnings Coverage

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

Ålandsbanken Abp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 75%, which means that Ålandsbanken Abp would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to grow by 16.5% over the next year if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could reach 85%, which is on the higher side, but certainly still feasible.

Ålandsbanken Abp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from €0.15 total annually to €2.65. This means that it has been growing its distributions at 33% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth Could Be Constrained

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Ålandsbanken Abp has seen EPS rising for the last five years, at 16% per annum. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

Our Thoughts On Ålandsbanken Abp's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Ålandsbanken Abp's payments are rock solid. Although they have been consistent in the past, we think the payments are a little high to be sustained. We don't think Ålandsbanken Abp is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Now, if you want to look closer, it would be worth checking out our free research on Ålandsbanken Abp management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.