Nolato's (STO:NOLA B) Dividend Will Be SEK1.50

Nolato AB (publ) (STO:NOLA B) has announced that it will pay a dividend of SEK1.50 per share on the 13th of May. This means the annual payment is 2.8% of the current stock price, which is above the average for the industry.

We've discovered 1 warning sign about Nolato. View them for free.

Nolato's Future Dividend Projections Appear Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. The last dividend was quite easily covered by Nolato's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Over the next year, EPS is forecast to expand by 46.3%. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Nolato

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was SEK0.85 in 2015, and the most recent fiscal year payment was SEK1.50. This implies that the company grew its distributions at a yearly rate of about 5.8% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Nolato May Find It Hard To Grow The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Unfortunately, Nolato's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Nolato's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Nolato that investors need to be conscious of moving forward. Is Nolato not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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