United Bankers Oyj (HEL:UNITED) Will Pay A Dividend Of €0.50

United Bankers Oyj's (HEL:UNITED) investors are due to receive a payment of €0.50 per share on 4th of April. This means that the annual payment will be 6.3% of the current stock price, which is in line with the average for the industry.

See our latest analysis for United Bankers Oyj

United Bankers Oyj's Earnings Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. At the time of the last dividend payment, United Bankers Oyj was paying out a very large proportion of what it was earning and 111% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

Looking forward, earnings per share is forecast to rise by 22.9% over the next year. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 49% which brings it into quite a comfortable range.

United Bankers Oyj's Dividend Has Lacked Consistency

It's comforting to see that United Bankers Oyj has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 9 years was €0.276 in 2015, and the most recent fiscal year payment was €1.00. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

United Bankers Oyj's Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that United Bankers Oyj has grown earnings per share at 22% per year over the past five years. However, United Bankers Oyj isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

The Dividend Could Prove To Be Unreliable

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 1 warning sign for United Bankers Oyj that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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