Scanfil Oyj (HEL:SCANFL) Is Increasing Its Dividend To €0.21

Scanfil Oyj's (HEL:SCANFL) dividend will be increasing from last year's payment of the same period to €0.21 on 9th of May. This takes the dividend yield to 2.8%, which shareholders will be pleased with.

Check out our latest analysis for Scanfil Oyj

Scanfil Oyj's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Scanfil Oyj is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, earnings per share is forecast to rise by 28.6% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

Scanfil Oyj Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the annual payment back then was €0.04, compared to the most recent full-year payment of €0.21. This means that it has been growing its distributions at 18% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See Scanfil Oyj's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Scanfil Oyj has impressed us by growing EPS at 5.9% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Scanfil Oyj's prospects of growing its dividend payments in the future.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Scanfil Oyj that investors should know about before committing capital to this stock. Is Scanfil Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.