Stock Analysis

Fasadgruppen Group's (STO:FG) Dividend Will Be Increased To kr1.20

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The board of Fasadgruppen Group AB (publ) (STO:FG) has announced that it will be increasing its dividend on the 19th of May to kr1.20. Although the dividend is now higher, the yield is only 0.8%, which is below the industry average.

Check out our latest analysis for Fasadgruppen Group

Fasadgruppen Group's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Fasadgruppen Group was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 51.1% over the next year. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

OM:FG Historic Dividend April 20th 2022

Fasadgruppen Group Doesn't Have A Long Payment History

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Fasadgruppen Group has seen EPS rising for the last five years, at 10% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Fasadgruppen Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Fasadgruppen Group is a strong income stock thanks to its track record and growing earnings. 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. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Fasadgruppen Group you should be aware of, and 1 of them is potentially serious. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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