Nordea Bank Abp's (HEL:NDA FI) Shareholders Will Receive A Bigger Dividend Than Last Year

Nordea Bank Abp (HEL:NDA FI) will increase its dividend from last year's comparable payment on the 31st of March to €0.94. This takes the dividend yield to 7.6%, which shareholders will be pleased with.

View our latest analysis for Nordea Bank Abp

Nordea Bank 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.

Nordea Bank Abp has a good history of paying out dividends, with its current track record at 7 years. Based on Nordea Bank Abp's last earnings report, the payout ratio is at a decent 65%, 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 1.3%. Analysts forecast the future payout ratio could be 67% over the same time horizon, which is a number we think the company can maintain.

Nordea Bank Abp's Dividend Has Lacked Consistency

It's comforting to see that Nordea Bank Abp has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. Since 2018, the dividend has gone from €0.68 total annually to €0.94. This implies that the company grew its distributions at a yearly rate of about 4.7% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Nordea Bank Abp has seen EPS rising for the last five years, at 31% per annum. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like Nordea Bank Abp's Dividend

Overall, a dividend increase is always good, and we think that Nordea Bank Abp is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. To that end, Nordea Bank Abp has 2 warning signs (and 1 which can't be ignored) we think you should know about. 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.