Wulff-Yhtiöt Oyj's (HEL:WUF1V) Dividend Will Be Increased To €0.07

Wulff-Yhtiöt Oyj (HEL:WUF1V) has announced that it will be increasing its periodic dividend on the 20th of October to €0.07, which will be 7.7% higher than last year's comparable payment amount of €0.065. This makes the dividend yield 4.2%, which is above the industry average.

Check out our latest analysis for Wulff-Yhtiöt Oyj

Wulff-Yhtiöt Oyj's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Wulff-Yhtiöt Oyj was paying only paying out a fraction of earnings, but the payment was a massive 223% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Looking forward, earnings per share is forecast to rise by 12.1% over the next year. If the dividend continues on this path, the payout ratio could be 33% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once 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 means that it has been growing its distributions at 5.8% per annum 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Wulff-Yhtiöt Oyj has grown earnings per share at 37% 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.

Our Thoughts On Wulff-Yhtiöt Oyj's Dividend

Overall, we always like to see the dividend being raised, but we don't think Wulff-Yhtiöt Oyj will make a great income stock. While Wulff-Yhtiöt Oyj is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. 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. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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