CapMan Oyj (HEL:CAPMAN) Will Pay A Larger Dividend Than Last Year At €0.08

CapMan Oyj (HEL:CAPMAN) will increase its dividend from last year's comparable payment on the 22nd of September to €0.08. Based on this payment, the dividend yield for the company will be 6.5%, which is fairly typical for the industry.

See our latest analysis for CapMan Oyj

CapMan Oyj's Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

Over the next year, EPS is forecast to expand by 48.0%. If recent patterns in the dividend continues, the payout ratio in 12 months could be 76% which is a bit high but can definitely be sustainable.

CapMan Oyj Is Still Building Its Track Record

It is great to see that CapMan 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 annual payment during the last 9 years was €0.04 in 2014, and the most recent fiscal year payment was €0.17. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Dividend Growth Could Be Constrained

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. CapMan Oyj has seen EPS rising for the last five years, at 21% per annum. While EPS is growing rapidly, CapMan Oyj paid out a very high 100% of its income as dividends. If earnings continue to grow, this dividend may be sustainable, but we think a payout this high definitely bears watching.

CapMan Oyj's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think CapMan Oyj will make a great income stock. Strong earnings growth means CapMan Oyj has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 4 warning signs for CapMan Oyj (1 is a bit concerning!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.