ASSA ABLOY (STO:ASSA B) Is Increasing Its Dividend To SEK2.95

ASSA ABLOY AB (publ) (STO:ASSA B) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of April to SEK2.95. Based on this payment, the dividend yield for the company will be 1.8%, which is fairly typical for the industry.

View our latest analysis for ASSA ABLOY

ASSA ABLOY's Projected Earnings Seem Likely To Cover Future Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, ASSA ABLOY was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 35.6%. If the dividend continues on this path, the payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

ASSA ABLOY Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was SEK1.90, compared to the most recent full-year payment of SEK5.90. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

ASSA ABLOY Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. ASSA ABLOY has impressed us by growing EPS at 9.4% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

ASSA ABLOY Looks Like A Great Dividend Stock

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. Earnings are easily covering distributions, and the company is generating plenty of cash. 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 example, we've picked out 1 warning sign for ASSA ABLOY that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.