Alma Media Oyj (HEL:ALMA) Is Increasing Its Dividend To €0.35

Alma Media Oyj (HEL:ALMA) will increase its dividend on the 7th of April to €0.35. Despite this raise, the dividend yield of 3.4% is only a modest boost to shareholder returns.

Check out our latest analysis for Alma Media Oyj

Alma Media Oyj's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Alma Media Oyj's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 24.0%. If the dividend continues on this path, the payout ratio could be 63% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from €0.40 in 2012 to the most recent annual payment of €0.35. Doing the maths, this is a decline of about 1.3% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Alma Media Oyj has impressed us by growing EPS at 21% per year over the past five years. Alma Media Oyj is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Alma Media Oyj Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Alma Media 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Alma Media 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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