ASSA ABLOY's (STO:ASSA B) Dividend Will Be Increased To SEK2.40

ASSA ABLOY AB (publ) (STO:ASSA B) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of May to SEK2.40. This will take the dividend yield to an attractive 2.0%, providing a nice boost to shareholder returns.

View our latest analysis for ASSA ABLOY

ASSA ABLOY's Payment Has 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 quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 25.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 32%, which is in the range that makes us comfortable with the sustainability of the dividend.

ASSA ABLOY Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of SEK1.50 in 2013 to the most recent total annual payment of SEK4.80. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Has Growth Potential

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 9.0% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

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. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 21 ASSA ABLOY analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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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