Wilh. Wilhelmsen Holding (OB:WWI) Is Increasing Its Dividend To $12.00

Wilh. Wilhelmsen Holding ASA's (OB:WWI) dividend will be increasing from last year's payment of the same period to $12.00 on 30th of May. Despite this raise, the dividend yield of 5.6% is only a modest boost to shareholder returns.

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Wilh. Wilhelmsen Holding's Projections Indicate Future Payments May Be Unsustainable

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, Wilh. Wilhelmsen Holding was paying only paying out a fraction of earnings, but the payment was a massive 139% of cash flows. The business might be trying to strike a balance between returning cash to shareholders and reinvesting back into the business, but this high of a payout ratio could definitely force the dividend to be cut if the company runs into a bit of a tough spot.

The next 12 months is set to see EPS grow by 1.6%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 187% over the next year.

View our latest analysis for Wilh. Wilhelmsen Holding

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. The annual payment during the last 10 years was $0.64 in 2015, and the most recent fiscal year payment was $1.82. This means that it has been growing its distributions at 11% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Wilh. Wilhelmsen Holding has grown earnings per share at 36% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Wilh. Wilhelmsen Holding will make a great income stock. While Wilh. Wilhelmsen Holding is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Wilh. Wilhelmsen Holding that investors need to be conscious of moving forward. 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.