Investor (STO:INVE A) Is Due To Pay A Dividend Of SEK1.45

Investor AB (publ)'s (STO:INVE A) investors are due to receive a payment of SEK1.45 per share on 13th of November. Based on this payment, the dividend yield for the company will be 1.8%, which is fairly typical for the industry.

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Investor's Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. The last dividend was quite comfortably covered by Investor's earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Looking forward, could fall by 20.2% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we think the payout ratio could reach 92%, which is definitely on the higher side.

View our latest analysis for Investor

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the dividend has gone from SEK2.25 total annually to SEK5.20. This implies that the company grew its distributions at a yearly rate of about 8.7% over that duration. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Investor's EPS has fallen by approximately 20% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Our Thoughts On Investor's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Investor's payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Investor has been making. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 2 warning signs for Investor that investors need to be conscious of moving forward. Is Investor 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.