Evli Oyj (HEL:EVLI) Is Paying Out A Larger Dividend Than Last Year

Evli Oyj (HEL:EVLI) has announced that it will be increasing its dividend from last year's comparable payment on the 27th of March to €1.18. The payment will take the dividend yield to 6.2%, which is in line with the average for the industry.

Check out our latest analysis for Evli Oyj

Evli Oyj's Future Dividend Projections Appear Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. The last dividend was quite easily covered by Evli Oyj's earnings. This means that a large portion of its earnings are being retained to grow the business.

EPS is set to fall by 13.6% over the next 12 months. If recent patterns in the dividend continue, we could see the payout ratio reaching 81% in the next 12 months, which is on the higher end of the range we would say is sustainable.

Evli Oyj Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2023, the annual payment back then was €1.15, compared to the most recent full-year payment of €1.18. This implies that the company grew its distributions at a yearly rate of about 1.3% over that duration. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Earnings per share has been sinking by 14% over the last three years. 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.

Our Thoughts On Evli Oyj's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Evli Oyj's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. 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. Case in point: We've spotted 2 warning signs for Evli Oyj (of which 1 is significant!) you should know about. Is Evli Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.