Wulff-Yhtiöt Oyj (HEL:WUF1V) Is Increasing Its Dividend To €0.07

The board of Wulff-Yhtiöt Oyj (HEL:WUF1V) has announced that it will be increasing its dividend by 7.7% on the 20th of October to €0.07, up from last year's comparable payment of €0.065. This will take the dividend yield to an attractive 4.2%, providing a nice boost to shareholder returns.

See our latest analysis for Wulff-Yhtiöt Oyj

Wulff-Yhtiöt Oyj's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, based ont he last payment, Wulff-Yhtiöt Oyj was earning enough to cover the dividend pretty comfortably. The business is returning a large chunk of its cash to shareholders, which means it is not being used to grow the business.

Over the next year, EPS is forecast to fall by 1.0%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 32%, which is comfortable for the company to continue in the future.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the annual payment back then was €0.08, compared to the most recent full-year payment of €0.14. This works out to be a compound annual growth rate (CAGR) of approximately 5.8% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Wulff-Yhtiöt Oyj might have put its house in order since then, but we remain cautious.

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. Wulff-Yhtiöt Oyj has impressed us by growing EPS at 41% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Wulff-Yhtiöt Oyj's payments are rock solid. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

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. For example, we've picked out 3 warning signs for Wulff-Yhtiöt Oyj that investors should know about before committing capital to this stock. Is Wulff-Yhtiöt Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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