Wulff-Yhtiöt Oyj's (HEL:WUF1V) Dividend Will Be €0.08

The board of 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 6.1%, providing a nice boost to shareholder returns.

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Wulff-Yhtiöt Oyj's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Wulff-Yhtiöt Oyj's dividend made up quite a large proportion of earnings but only 31% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, earnings per share is forecast to rise by 68.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 45% by next year, which is in a pretty sustainable range.

View 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. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of €0.10 in 2016 to the most recent total annual payment of €0.16. This implies that the company grew its distributions at a yearly rate of about 5.4% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Wulff-Yhtiöt Oyj Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Wulff-Yhtiöt Oyj has been growing its earnings per share at 10.0% a year over the past five years. Past earnings growth has been decent, but unless this is one of those rare businesses that can grow without additional capital investment or marketing spend, we'd generally expect the higher payout ratio to limit its future growth prospects.

We Really Like Wulff-Yhtiöt Oyj's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 3 warning signs for Wulff-Yhtiöt Oyj that you should be aware of before investing. 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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