FM Mattsson (STO:FMM B) Has Announced A Dividend Of SEK1.00

FM Mattsson AB (publ) (STO:FMM B) will pay a dividend of SEK1.00 on the 24th of November. The yield is still above the industry average at 3.5%.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

FM Mattsson's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, FM Mattsson's dividend made up quite a large proportion of earnings but only 45% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

If the trend of the last few years continues, EPS will grow by 6.3% over the next 12 months. If the dividend continues on this path, the payout ratio could be 74% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for FM Mattsson

FM Mattsson's Dividend Has Lacked Consistency

It's comforting to see that FM Mattsson has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. The annual payment during the last 8 years was SEK1.00 in 2017, and the most recent fiscal year payment was SEK2.00. This means that it has been growing its distributions at 9.1% per annum over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

FM Mattsson Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that FM Mattsson has grown earnings per share at 6.3% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

In Summary

Even though the dividend was cut this year, we think FM Mattsson has the ability to make consistent payments in the future. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for FM Mattsson (of which 1 shouldn't be ignored!) you should know about. Is FM Mattsson 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.