Lemonsoft Oyj (HEL:LEMON) Will Pay A Dividend Of €0.14

Lemonsoft Oyj (HEL:LEMON) will pay a dividend of €0.14 on the 22nd of April. The dividend yield is 2.4% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Lemonsoft Oyj

Lemonsoft Oyj's Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, Lemonsoft Oyj's dividend was only 49% of earnings, however it was paying out 107% of free cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that 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 17.0% over the next year. If the dividend continues on this path, the payout ratio could be 48% by next year, which we think can be pretty sustainable going forward.

Lemonsoft Oyj Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of €0.13 in 2022 to the most recent total annual payment of €0.14. This means that it has been growing its distributions at 3.8% per annum over that time. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Lemonsoft Oyj has impressed us by growing EPS at 21% per year over the past five years. Lemonsoft Oyj is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Our Thoughts On Lemonsoft Oyj's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Lemonsoft Oyj's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Lemonsoft Oyj that investors should take into consideration. Is Lemonsoft Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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