Wulff-Yhtiöt Oyj (HEL:WUF1V) Will Pay A Dividend Of €0.08

Wulff-Yhtiöt Oyj (HEL:WUF1V) has announced that it will pay a dividend of €0.08 per share on the 13th of October. This will take the dividend yield to an attractive 5.5%, providing a nice boost to shareholder returns.

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Wulff-Yhtiöt Oyj's Projected Earnings Seem Likely To Cover Future Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Wulff-Yhtiöt Oyj's profits didn't cover the dividend, but the company was generating enough cash instead. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.

Analysts expect a massive rise in earnings per share in the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 40% which is fairly sustainable.

See our latest analysis for Wulff-Yhtiöt Oyj

Wulff-Yhtiöt Oyj's Dividend Has Lacked Consistency

It's comforting to see that Wulff-Yhtiöt Oyj has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2016, the dividend has gone from €0.10 total annually to €0.16. This works out to be a compound annual growth rate (CAGR) of approximately 5.4% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. In the last five years, Wulff-Yhtiöt Oyj's earnings per share has shrunk at approximately 3.5% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

The Dividend Could Prove To Be Unreliable

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 is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 4 warning signs for Wulff-Yhtiöt Oyj that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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