Karelia Tobacco's (ATH:KARE) Dividend Will Be Increased To €14.00

Karelia Tobacco Company Inc.'s (ATH:KARE) dividend will be increasing from last year's payment of the same period to €14.00 on 6th of June. This takes the annual payment to 4.4% of the current stock price, which unfortunately is below what the industry is paying.

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Karelia Tobacco's Future Dividend Projections Appear Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Karelia Tobacco's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 10.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 32% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Karelia Tobacco

Karelia Tobacco Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was €9.30 in 2015, and the most recent fiscal year payment was €14.00. This implies that the company grew its distributions at a yearly rate of about 4.2% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Karelia Tobacco has impressed us by growing EPS at 11% per year over the past five years. Karelia Tobacco definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Karelia Tobacco's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Karelia Tobacco stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.