Elisa Oyj (HEL:ELISA) Has Announced A Dividend Of €1.17

The board of Elisa Oyj (HEL:ELISA) has announced that it will pay a dividend on the 24th of October, with investors receiving €1.17 per share. Based on this payment, the dividend yield for the company will be 5.0%, which is fairly typical for the industry.

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Elisa Oyj's Payment Could Potentially Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

EPS is set to grow by 21.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 90%, which is on the higher side, but certainly still feasible.

Check out our latest analysis for Elisa Oyj

Elisa Oyj Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of €1.32 in 2015 to the most recent total annual payment of €2.35. This implies that the company grew its distributions at a yearly rate of about 5.9% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 3.1% a year for the past five years, which isn't massive but still better than seeing them shrink. The company is paying out a lot of its profits, even though it is growing those profits pretty slowly. Limited recent earnings growth and a high payout ratio makes it hard for us to envision strong future dividend growth, unless the company should have substantial pricing power or some form of competitive advantage.

Elisa Oyj's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Elisa Oyj (1 is potentially serious!) that you should be aware of before investing. Is Elisa Oyj not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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