Electrolux Professional (STO:EPRO B) Has Announced That It Will Be Increasing Its Dividend To SEK0.85

Electrolux Professional AB (publ) (STO:EPRO B) will increase its dividend from last year's comparable payment on the 14th of May to SEK0.85. Despite this raise, the dividend yield of 1.1% is only a modest boost to shareholder returns.

Check out our latest analysis for Electrolux Professional

Electrolux Professional's Future Dividend Projections Appear Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Electrolux Professional's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 73.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 18% by next year, which is in a pretty sustainable range.

Electrolux Professional Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2022, the dividend has gone from SEK0.50 total annually to SEK0.85. This works out to be a compound annual growth rate (CAGR) of approximately 19% a year over that time. Electrolux Professional 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's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 3.9% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Electrolux Professional has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Electrolux Professional's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 Electrolux Professional analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Electrolux Professional not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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