Is It Worth Considering Viafin Service Oyj (HEL:VIAFIN) For Its Upcoming Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Viafin Service Oyj (HEL:VIAFIN) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Viafin Service Oyj's shares on or after the 30th of April, you won't be eligible to receive the dividend, when it is paid on the 9th of May.

The company's next dividend payment will be €0.65 per share, on the back of last year when the company paid a total of €0.65 to shareholders. Based on the last year's worth of payments, Viafin Service Oyj stock has a trailing yield of around 3.5% on the current share price of €18.80. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

We've discovered 1 warning sign about Viafin Service Oyj. View them for free.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Viafin Service Oyj is paying out an acceptable 52% of its profit, a common payout level among most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out more than half (67%) of its free cash flow in the past year, which is within an average range for most companies.

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.

Check out our latest analysis for Viafin Service Oyj

Click here to see how much of its profit Viafin Service Oyj paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Viafin Service Oyj's earnings per share have been growing at 17% a year for the past five years. Viafin Service Oyj is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Viafin Service Oyj has delivered 32% dividend growth per year on average over the past five years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

From a dividend perspective, should investors buy or avoid Viafin Service Oyj? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Viafin Service Oyj's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 52% and 67% respectively. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Viafin Service Oyj's dividend merits.

In light of that, while Viafin Service Oyj has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 1 warning sign for Viafin Service Oyj that we recommend you consider before investing in the business.

If you're in the market for strong dividend payers, we recommend checking 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.