Vistin Pharma's (OB:VISTN) Shareholders Will Receive A Bigger 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 5.1%, which is above the industry average.

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Vistin Pharma's Projected Earnings Seem Likely To Cover Future Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last payment made up 72% of earnings, but cash flows were much higher. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

Looking forward, earnings per share could rise by 61.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 62% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Vistin Pharma

Vistin Pharma's Dividend Has Lacked Consistency

It's comforting to see that Vistin Pharma has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The annual payment during the last 9 years was NOK0.60 in 2016, and the most recent fiscal year payment was NOK1.25. This means that it has been growing its distributions at 8.5% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Vistin Pharma might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Vistin Pharma has grown earnings per share at 62% per year over the past five years. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.

Vistin Pharma Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Vistin Pharma is a strong income stock thanks to its track record and growing earnings. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Vistin Pharma that investors should take into consideration. Is Vistin Pharma 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.