Ovaro Kiinteistösijoitus Oyj's (HEL:OVARO) Upcoming Dividend Will Be Larger Than Last Year's

Ovaro Kiinteistösijoitus Oyj (HEL:OVARO) has announced that it will be increasing its dividend from last year's comparable payment on the 22nd of April to €0.13. The payment will take the dividend yield to 3.6%, which is in line with the average for the industry.

View our latest analysis for Ovaro Kiinteistösijoitus Oyj

Ovaro Kiinteistösijoitus Oyj's Earnings Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last dividend, Ovaro Kiinteistösijoitus Oyj is earning enough to cover the payment, but then it makes up 1,854% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS is forecast to fall by 50.4%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 71%, which is comfortable for the company to continue in the future.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2014, the dividend has gone from €1.12 total annually to €0.13. The dividend has fallen 88% over that period. 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

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. We are encouraged to see that Ovaro Kiinteistösijoitus Oyj has grown earnings per share at 34% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

Our Thoughts On Ovaro Kiinteistösijoitus Oyj's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Ovaro Kiinteistösijoitus Oyj's payments are rock solid. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We don't think Ovaro Kiinteistösijoitus Oyj is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 4 warning signs for Ovaro Kiinteistösijoitus Oyj (1 doesn't sit too well with us!) that you should be aware of before investing. Is Ovaro Kiinteistösijoitus 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.