Tokmanni Group Oyj's (HEL:TOKMAN) Dividend Will Be Increased To €0.96

The board of Tokmanni Group Oyj (HEL:TOKMAN) has announced that it will be increasing its dividend on the 8th of April to €0.96. This will take the dividend yield from 5.9% to 5.9%, providing a nice boost to shareholder returns.

View our latest analysis for Tokmanni Group Oyj

Tokmanni Group Oyj's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Before this announcement, Tokmanni Group Oyj was paying out 72% of earnings, but a comparatively small 54% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Over the next year, EPS is forecast to expand by 0.3%. If recent patterns in the dividend continues, the payout ratio in 12 months could be 86% which is a bit high but can definitely be sustainable.

Tokmanni Group Oyj Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2017, the dividend has gone from €0.41 to €0.96. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Tokmanni Group Oyj has impressed us by growing EPS at 21% per year over the past five years. Earnings per share is growing nicely, but the company is paying out most of its earnings as dividends. This might be sustainable, but we wonder why Tokmanni Group Oyj is not retaining those earnings to reinvest in growth.

Tokmanni Group Oyj Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Tokmanni Group Oyj that investors should take into consideration. Is Tokmanni Group Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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