Nimbus Group (STO:BOAT) Is Paying Out A Dividend Of SEK1.50

The board of Nimbus Group AB (Publ) (STO:BOAT) has announced that it will pay a dividend on the 24th of May, with investors receiving SEK1.50 per share. This means that the annual payment will be 3.7% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Nimbus Group

Nimbus Group's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last payment, Nimbus Group was earning enough to cover the dividend, but free cash flows weren't positive. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Looking forward, earnings per share is forecast to fall by 33.2% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 29%, which is comfortable for the company to continue in the future.

Nimbus Group Is Still Building Its Track Record

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 Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. EPS has grown 8.9% over the last 12 months. Rising earnings will make it easier for the company to keep paying dividends, and possibly even increase them. Nimbus Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio. We do note though, one year is too short a time to be drawing strong conclusions about a company's future prospects.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Nimbus Group is a great stock to add to your portfolio if income is your focus.

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. To that end, Nimbus Group has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about. Is Nimbus Group 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.