Uponor Oyj (HEL:UPONOR) Is Paying Out A Larger Dividend Than Last Year

Uponor Oyj's (HEL:UPONOR) dividend will be increasing from last year's payment of the same period to €0.34 on 28th of March. This makes the dividend yield 3.8%, which is above the industry average.

Check out our latest analysis for Uponor Oyj

Uponor Oyj's Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last payment was quite easily covered by earnings, but it made up 133% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Over the next year, EPS is forecast to expand by 15.0%. If the dividend continues on this path, the payout ratio could be 52% by next year, which we think can be pretty sustainable going forward.

Uponor Oyj Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from €0.35 total annually to €0.69. This means that it has been growing its distributions at 7.0% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

We Could See Uponor Oyj's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Uponor Oyj has seen EPS rising for the last five years, at 7.9% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.

Our Thoughts On Uponor Oyj's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While Uponor Oyj is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 picked out 1 warning sign for Uponor Oyj that investors should know about before committing capital to this stock. Is Uponor 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.