Evli Oyj (HEL:EVLI) Is Paying Out A Dividend Of €1.15

The board of Evli Oyj (HEL:EVLI) has announced that it will pay a dividend on the 25th of March, with investors receiving €1.15 per share. This means that the annual payment will be 5.7% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Evli Oyj

Evli Oyj's Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, Evli Oyj's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.

Earnings per share is forecast to rise by 36.5% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 77% which is a bit high but can definitely be sustainable.

Evli Oyj Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Evli Oyj's Dividend Might Lack Growth

Investors could be attracted to the stock based on the quality of its payment history. Evli Oyj's earnings per share is up 32% on last year. We always like to see numbers like these going up, but we don't expect them to shoot up forever, especially as the company grows. EPS has been growing well, but Evli Oyj has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain. However, we would never make any decisions based on only a single year of data, especially when assessing long term dividend potential.

Our Thoughts On Evli Oyj's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Evli Oyj's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Evli Oyj that you should be aware of before investing. Is Evli Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.