Electrolux Professional (STO:EPRO B) Will Pay A Larger Dividend Than Last Year At 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. Even though the dividend went up, the yield is still quite low at only 1.5%.

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Electrolux Professional's Payment Could Potentially Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Electrolux Professional's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 60.9%. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

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Electrolux Professional Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2022, the annual payment back then was SEK0.50, compared to the most recent full-year payment of SEK0.85. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Electrolux Professional has grown earnings per share at 7.4% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Electrolux Professional's prospects of growing its dividend payments in the future.

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. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 3 analysts we track are forecasting for Electrolux Professional for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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