Oriola Oyj (HEL:OKDBV) Is About To Go Ex-Dividend, And It Pays A 1.4% Yield

Readers hoping to buy Oriola Oyj (HEL:OKDBV) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 17th of March will not receive this dividend, which will be paid on the 10th of June.

Oriola Oyj's next dividend payment will be €0.03 per share. Last year, in total, the company distributed €0.03 to shareholders. Based on the last year's worth of payments, Oriola Oyj has a trailing yield of 1.4% on the current stock price of €2.08. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Oriola Oyj can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Oriola Oyj

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Oriola Oyj's payout ratio is modest, at just 48% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Dividends consumed 52% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

It's positive to see that Oriola Oyj's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Oriola Oyj's earnings per share have fallen at approximately 24% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Oriola Oyj has seen its dividend decline 13% per annum on average over the past 10 years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Is Oriola Oyj worth buying for its dividend? Earnings per share have fallen significantly, although at least Oriola Oyj paid out less than half of its profits and free cash flow over the last year, leaving some margin of safety. To summarise, Oriola Oyj looks okay on this analysis, although it doesn't appear a stand-out opportunity.

If you want to look further into Oriola Oyj, it's worth knowing the risks this business faces. To help with this, we've discovered 1 warning sign for Oriola Oyj that you should be aware of before investing in their shares.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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