QleanAir (STO:QAIR) Has Announced That It Will Be Increasing Its Dividend To kr1.50

By
Simply Wall St
Published
May 13, 2022
OM:QAIR
Source: Shutterstock

QleanAir AB (publ)'s (STO:QAIR) dividend will be increasing to kr1.50 on 20th of May. This takes the annual payment to 4.4% of the current stock price, which is about average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. QleanAir's stock price has reduced by 36% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

See our latest analysis for QleanAir

QleanAir's Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. However, QleanAir's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 6.0% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 40%, which is comfortable for the company to continue in the future.

historic-dividend
OM:QAIR Historic Dividend May 13th 2022

QleanAir Is Still Building Its Track Record

Without a track record of dividend payments, we can't make a judgement on how stable it has been. 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. It's encouraging to see QleanAir has been growing its earnings per share at 36% a year over the past three years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

QleanAir Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that QleanAir is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 4 warning signs for QleanAir that investors should take into consideration. Is QleanAir not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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