Nordic Waterproofing Holding (STO:NWG) Will Pay A Larger Dividend Than Last Year At SEK7.00

Nordic Waterproofing Holding AB (publ) (STO:NWG) has announced that it will be increasing its dividend from last year's comparable payment on the 5th of May to SEK7.00. This takes the dividend yield to 4.2%, which shareholders will be pleased with.

See our latest analysis for Nordic Waterproofing Holding

Nordic Waterproofing Holding's Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, Nordic Waterproofing Holding was quite comfortably earning enough to cover the dividend. 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 5.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 53% by next year, which is in a pretty sustainable range.

Nordic Waterproofing Holding's Dividend Has Lacked Consistency

Looking back, Nordic Waterproofing Holding's dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. The annual payment during the last 6 years was SEK3.75 in 2017, and the most recent fiscal year payment was SEK7.00. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Nordic Waterproofing Holding has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

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. Nordic Waterproofing Holding has impressed us by growing EPS at 19% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Nordic Waterproofing Holding's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For instance, we've picked out 1 warning sign for Nordic Waterproofing Holding that investors should take into consideration. Is Nordic Waterproofing Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.