Uponor Oyj (HEL:UPONOR) Passed Our Checks, And It's About To Pay A €0.29 Dividend

Simply Wall St
September 10, 2021
Source: Shutterstock

Uponor Oyj (HEL:UPONOR) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Uponor Oyj's shares on or after the 15th of September will not receive the dividend, which will be paid on the 23rd of September.

The company's upcoming dividend is €0.29 a share, following on from the last 12 months, when the company distributed a total of €0.57 per share to shareholders. Based on the last year's worth of payments, Uponor Oyj stock has a trailing yield of around 2.1% on the current share price of €26.72. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Uponor Oyj has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Uponor Oyj

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Uponor Oyj's payout ratio is modest, at just 39% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 20% of its free cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

HLSE:UPONOR Historic Dividend September 11th 2021

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Uponor Oyj's earnings have been skyrocketing, up 23% per annum for the past five years. Uponor Oyj is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Uponor Oyj's dividend payments are broadly unchanged compared to where they were 10 years ago.

The Bottom Line

Is Uponor Oyj an attractive dividend stock, or better left on the shelf? Uponor Oyj has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Uponor Oyj looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Uponor Oyj is facing. Every company has risks, and we've spotted 2 warning signs for Uponor Oyj you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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