AcadeMedia AB (publ) (STO:ACAD) has announced that it will pay a dividend of SEK1.75 per share on the 5th of December. Based on this payment, the dividend yield will be 2.7%, which is fairly typical for the industry.
See our latest analysis for AcadeMedia
AcadeMedia's Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, AcadeMedia's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS is forecast to expand by 58.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 19%, which is in the range that makes us comfortable with the sustainability of the dividend.
AcadeMedia Doesn't Have A Long Payment History
It is great to see that AcadeMedia has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 5 years was SEK1.25 in 2019, and the most recent fiscal year payment was SEK1.75. This implies that the company grew its distributions at a yearly rate of about 7.0% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider AcadeMedia to be a consistent dividend paying stock.
The Dividend Has Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. AcadeMedia has impressed us by growing EPS at 8.7% per year over the past five years. AcadeMedia definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
AcadeMedia Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think AcadeMedia might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for AcadeMedia that investors should know about before committing capital to this stock. Is AcadeMedia 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.
About OM:ACAD
AcadeMedia
Operates as an independent education provider in Sweden, Norway, the Netherlands, and Germany.
Undervalued with solid track record.
