Atlas Copco's (STO:ATCO A) Dividend Will Be Increased To SEK1.50

Atlas Copco AB (publ) (STO:ATCO A) will increase its dividend from last year's comparable payment on the 7th of May to SEK1.50. Although the dividend is now higher, the yield is only 2.1%, which is below the industry average.

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Atlas Copco's Projected Earnings Seem Likely To Cover Future Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, Atlas Copco 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.

The next year is set to see EPS grow by 18.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 42% by next year, which is in a pretty sustainable range.

View our latest analysis for Atlas Copco

Atlas Copco Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was SEK1.38, compared to the most recent full-year payment of SEK3.00. This means that it has been growing its distributions at 8.1% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Atlas Copco has seen EPS rising for the last five years, at 12% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Atlas Copco's Dividend

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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 18 Atlas Copco analysts we track are forecasting continued growth with our free report on analyst estimates for the company . Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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