ABG Sundal Collier Holding (OB:ABG) Is Paying Out A Dividend Of NOK0.50

ABG Sundal Collier Holding ASA's (OB:ABG) investors are due to receive a payment of NOK0.50 per share on 6th of May. This means the annual payment is 7.1% of the current stock price, which is above the average for the industry.

Check out our latest analysis for ABG Sundal Collier Holding

ABG Sundal Collier Holding's Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last payment made up 88% of earnings, but cash flows were much higher. This leaves plenty of cash for reinvestment into the business.

EPS is set to grow by 3.4% over the next year if recent trends continue. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 84%, which is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. There hasn't been much of a change in the dividend over the last 10 years. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, ABG Sundal Collier Holding has only grown its earnings per share at 3.4% per annum over the past five years. Slow growth and a high payout ratio could mean that ABG Sundal Collier Holding has maxed out the amount that it has been able to pay to shareholders. This isn't the end of the world, but for investors looking for strong dividend growth they may want to look elsewhere.

Our Thoughts On ABG Sundal Collier Holding's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about ABG Sundal Collier Holding's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of 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. For example, we've identified 2 warning signs for ABG Sundal Collier Holding (1 makes us a bit uncomfortable!) that you should be aware of before investing. Is ABG Sundal Collier Holding 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.