Why You Might Be Interested In Tokmanni Group Oyj (HEL:TOKMAN) For Its Upcoming Dividend

By
Simply Wall St
Published
March 21, 2022
HLSE:TOKMAN
Source: Shutterstock

Readers hoping to buy Tokmanni Group Oyj (HEL:TOKMAN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Tokmanni Group Oyj's shares before the 24th of March to receive the dividend, which will be paid on the 8th of April.

The company's next dividend payment will be €0.96 per share. Last year, in total, the company distributed €0.96 to shareholders. Looking at the last 12 months of distributions, Tokmanni Group Oyj has a trailing yield of approximately 5.7% on its current stock price of €16.72. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Tokmanni Group Oyj has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Tokmanni Group Oyj

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Tokmanni Group Oyj paid out 72% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Thankfully its dividend payments took up just 47% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Tokmanni Group 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.

historic-dividend
HLSE:TOKMAN Historic Dividend March 21st 2022

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Tokmanni Group Oyj has grown its earnings rapidly, up 21% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Tokmanni Group Oyj could have strong prospects for future increases to the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Tokmanni Group Oyj has delivered an average of 19% per year annual increase in its dividend, based on the past five years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Is Tokmanni Group Oyj an attractive dividend stock, or better left on the shelf? Tokmanni Group Oyj's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Tokmanni Group Oyj looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Tokmanni Group Oyj for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 1 warning sign with Tokmanni Group Oyj and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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