Terveystalo Oyj's (HEL:TTALO) Dividend Will Be Increased To €0.14

Terveystalo Oyj (HEL:TTALO) has announced that it will be increasing its dividend on the 20th of April to €0.14. This makes the dividend yield 2.4%, which is above the industry average.

Check out our latest analysis for Terveystalo Oyj

Terveystalo Oyj's Earnings Easily Cover the Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by Terveystalo Oyj's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 6.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 52%, which is in the range that makes us comfortable with the sustainability of the dividend.

Terveystalo Oyj's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The dividend has gone from €0.06 in 2018 to the most recent annual payment of €0.28. This means that it has been growing its distributions at 47% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Terveystalo Oyj has impressed us by growing EPS at 43% per year over the past five years. Terveystalo Oyj is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Terveystalo Oyj Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Terveystalo Oyj is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. Taking the debate a bit further, we've identified 2 warning signs for Terveystalo Oyj that investors need to be conscious of moving forward. 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.