Concentric (STO:COIC) Is Increasing Its Dividend To SEK4.00

Concentric AB (publ) (STO:COIC) will increase its dividend from last year's comparable payment on the 25th of April to SEK4.00. Even though the dividend went up, the yield is still quite low at only 1.8%.

Check out our latest analysis for Concentric

Concentric's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Concentric's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 19.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was SEK2.00, compared to the most recent full-year payment of SEK4.00. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that Concentric has grown earnings per share at 12% per year over the past five years. Concentric definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Concentric 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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Concentric that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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