Wilh. Wilhelmsen Holding (OB:WWI) Has Announced That It Will Be Increasing Its Dividend To $6.00

Wilh. Wilhelmsen Holding ASA (OB:WWI) will increase its dividend from last year's comparable payment on the 16th of May to $6.00. Although the dividend is now higher, the yield is only 2.4%, which is below the industry average.

Check out our latest analysis for Wilh. Wilhelmsen Holding

Wilh. Wilhelmsen Holding Doesn't Earn Enough To Cover Its Payments

Even a low dividend yield can be attractive if it is sustained for years on end. Based on the last payment, Wilh. Wilhelmsen Holding was paying only paying out a fraction of earnings, but the payment was a massive 190% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

The next 12 months is set to see EPS grow by 29.8%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 110% over the next year.

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. Since 2013, the annual payment back then was $1.31, compared to the most recent full-year payment of $0.643. The dividend has shrunk at around 6.8% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see that Wilh. Wilhelmsen Holding has been growing its earnings per share at 11% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Our Thoughts On Wilh. Wilhelmsen Holding's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Wilh. Wilhelmsen Holding's payments are rock solid. 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.

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. See if management have their own wealth at stake, by checking insider shareholdings in Wilh. Wilhelmsen Holding stock. Is Wilh. Wilhelmsen 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.