Viafin Service Oyj (HEL:VIAFIN) Is Increasing Its Dividend To €0.65

Viafin Service Oyj (HEL:VIAFIN) has announced that it will be increasing its dividend from last year's comparable payment on the 9th of May to €0.65. This will take the dividend yield to an attractive 3.5%, providing a nice boost to shareholder returns.

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Viafin Service Oyj's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite comfortably covered by Viafin Service Oyj's earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

The next year is set to see EPS grow by 41.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 42% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Viafin Service Oyj

Viafin Service Oyj Doesn't Have A Long Payment History

It is great to see that Viafin Service Oyj has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of €0.16 in 2020 to the most recent total annual payment of €0.65. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Viafin Service Oyj has seen EPS rising for the last three years, at 17% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Our Thoughts On Viafin Service Oyj's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Viafin Service Oyj has been making. We don't think Viafin Service Oyj is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Viafin Service Oyj that you should be aware of before investing. Is Viafin Service Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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