Vistin Pharma (OB:VISTN) Is Paying Out A Larger Dividend Than Last Year

Vistin Pharma ASA's (OB:VISTN) dividend will be increasing from last year's payment of the same period to NOK1.25 on 12th of June. This makes the dividend yield 4.9%, which is above the industry average.

Our free stock report includes 1 warning sign investors should be aware of before investing in Vistin Pharma. Read for free now.

Vistin Pharma's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before this announcement, Vistin Pharma was paying out 72% of earnings, but a comparatively small 72% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

Over the next year, EPS could expand by 61.8% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 62%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Vistin Pharma

Vistin Pharma's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 9 years was NOK0.60 in 2016, and the most recent fiscal year payment was NOK1.25. This implies that the company grew its distributions at a yearly rate of about 8.5% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Vistin Pharma has seen EPS rising for the last five years, at 62% per annum. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Vistin Pharma hasn't been doing.

We Really Like Vistin Pharma's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Vistin Pharma that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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