ASSA ABLOY (STO:ASSA B) Is Paying Out A Larger Dividend Than Last Year

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 1.9%, which shareholders will be pleased with.

Check out our latest analysis for ASSA ABLOY

ASSA ABLOY's Payment Could Potentially Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, ASSA ABLOY's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 32.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.

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 SEK1.90 in 2015, and the most recent fiscal year payment was SEK5.90. This means that it has been growing its distributions at 12% per annum over that time. 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 could be attracted to the stock based on the quality of its payment 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, 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for ASSA ABLOY that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.