Loihde Oyj (HEL:LOIHDE) Has Announced A Dividend Of €1.00

Loihde Oyj (HEL:LOIHDE) will pay a dividend of €1.00 on the 17th of May. This takes the dividend yield to 7.3%, which shareholders will be pleased with.

View our latest analysis for Loihde Oyj

Loihde Oyj Is Paying Out More Than It Is Earning

A big dividend yield for a few years doesn't mean much if it can't be sustained. Loihde Oyj isn't generating any profits, and it is paying out a very high proportion of the cash it is earning. These payout levels would generally be quite difficult to keep up.

Earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along recent trends, we could see the payout ratio reach 1,213%, which is on the unsustainable side.

Loihde Oyj's Dividend Has Lacked Consistency

Even in its short history, we have seen the dividend cut. The annual payment during the last 2 years was €0.14 in 2022, and the most recent fiscal year payment was €1.00. This means that it has been growing its distributions at 167% per annum over that time. Loihde Oyj has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Has Limited Growth Potential

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Loihde Oyj's EPS has fallen by approximately 106% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Loihde Oyj's Dividend Doesn't Look Great

Overall, while the dividend being raised can be good, there are some concerns about its long term sustainability. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. Overall, the dividend is not reliable enough to make this a good income stock.

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. Case in point: We've spotted 2 warning signs for Loihde Oyj (of which 1 is a bit concerning!) you should know about. Is Loihde Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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