ASSA ABLOY (STO:ASSA B) Has Announced That It Will Be Increasing Its Dividend To SEK2.95

The board of ASSA ABLOY AB (publ) (STO:ASSA B) has announced that it will be paying its dividend of SEK2.95 on the 30th of April, an increased payment from last year's comparable dividend. This takes the dividend yield to 2.1%, which shareholders will be pleased with.

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ASSA ABLOY's Future Dividend Projections Appear Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, ASSA ABLOY's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 30.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 34% by next year, which is in a pretty sustainable range.

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ASSA ABLOY Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was SEK1.90 in 2015, and the most recent fiscal year payment was SEK5.90. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

ASSA ABLOY Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. ASSA ABLOY has impressed us by growing EPS at 9.4% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

ASSA ABLOY Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for ASSA ABLOY that investors should know about before committing capital to this stock. Is ASSA ABLOY not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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