Måsøval (OB:MAS) Is Paying Out A Larger Dividend Than Last Year

The board of Måsøval AS (OB:MAS) has announced that it will be increasing its dividend by 200% on the 1st of January to NOK1.50, up from last year's comparable payment of NOK0.50. Although the dividend is now higher, the yield is only 2.4%, which is below the industry average.

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Måsøval's Projections Indicate Future Payments May Be Unsustainable

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, Måsøval was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

EPS is forecast to rise very quickly over the next 12 months. If recent patterns in the dividend continues, we would start to get a bit worried, with the payout ratio possibly reaching 223%.

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Måsøval's Dividend Has Lacked Consistency

Looking back, the dividend has been unstable but with a relatively short history, we think it may be a bit early to draw conclusions about long term dividend sustainability. The annual payment during the last 3 years was NOK2.00 in 2022, and the most recent fiscal year payment was NOK0.50. Dividend payments have fallen sharply, down 75% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend's Growth Prospects Are Limited

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. However, Måsøval's EPS was effectively flat over the past five years, which could stop the company from paying more every year. While growth may be thin on the ground, Måsøval could always pay out a higher proportion of earnings to increase shareholder returns.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Måsøval will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Måsøval that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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