ASSA ABLOY (STO:ASSA B) Is Increasing Its Dividend To SEK2.40

ASSA ABLOY AB (publ) (STO:ASSA B) will increase its dividend from last year's comparable payment on the 16th of November to SEK2.40. This will take the dividend yield to an attractive 2.0%, providing a nice boost to shareholder returns.

Check out our latest analysis for ASSA ABLOY

ASSA ABLOY's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, ASSA ABLOY was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 30.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

ASSA ABLOY Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was SEK1.50 in 2013, and the most recent fiscal year payment was SEK4.80. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. ASSA ABLOY has seen EPS rising for the last five years, at 8.7% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like ASSA ABLOY's Dividend

Overall, a dividend increase is always good, and we think that ASSA ABLOY is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 20 analysts we track are forecasting for ASSA ABLOY for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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