Harvia Oyj (HEL:HARVIA) Is Increasing Its Dividend To €0.32

The board of Harvia Oyj (HEL:HARVIA) has announced that it will be paying its dividend of €0.32 on the 30th of October, an increased payment from last year's comparable dividend. This makes the dividend yield 2.9%, which is above the industry average.

View our latest analysis for Harvia Oyj

Harvia Oyj's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Harvia Oyj's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 30.1% over the next year. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Harvia Oyj Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of €0.36 in 2018 to the most recent total annual payment of €0.64. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

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. It's encouraging to see that Harvia Oyj has been growing its earnings per share at 33% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Harvia Oyj could prove to be a strong dividend payer.

We Really Like Harvia Oyj's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 3 warning signs for Harvia Oyj that investors need to be conscious of moving forward. Is Harvia Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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