Epiroc (STO:EPI A) Has Announced A Dividend Of SEK1.90

Epiroc AB (publ) (STO:EPI A) will pay a dividend of SEK1.90 on the 15th of May. Including this payment, the dividend yield on the stock will be 1.9%, which is a modest boost for shareholders' returns.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Epiroc's Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Based on the last payment, Epiroc was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 33.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 44%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Epiroc

Epiroc Is Still Building Its Track Record

Epiroc's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of SEK2.10 in 2019 to the most recent total annual payment of SEK3.80. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. Epiroc has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Epiroc has seen EPS rising for the last five years, at 8.1% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Epiroc Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Epiroc might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 18 analysts we track are forecasting for Epiroc for free with public analyst estimates for the company . Is Epiroc not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.