Fiskars Oyj Abp (HEL:FSKRS) Has Announced A Dividend Of €0.42

The board of Fiskars Oyj Abp (HEL:FSKRS) has announced that it will pay a dividend of €0.42 per share on the 18th of September. This takes the annual payment to 5.8% of the current stock price, which is about average for the industry.

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Fiskars Oyj Abp's Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Prior to this announcement, the company was paying out 595% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Analysts expect a massive rise in earnings per share in the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 70%, which would make us comfortable with the dividend's sustainability, despite the levels currently being elevated.

View our latest analysis for Fiskars Oyj Abp

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of €0.68 in 2015 to the most recent total annual payment of €0.84. This works out to be a compound annual growth rate (CAGR) of approximately 2.1% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

The Dividend Has Limited Growth Potential

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Over the past five years, it looks as though Fiskars Oyj Abp's EPS has declined at around 22% a year. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

We're Not Big Fans Of Fiskars Oyj Abp's Dividend

In summary, investors will like to be receiving a higher dividend, but we have some questions about whether it can be sustained over the long term. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Fiskars Oyj Abp (of which 2 shouldn't be ignored!) you should know about. Is Fiskars Oyj Abp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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