AAK AB (publ.) (STO:AAK) Will Pay A Larger Dividend Than Last Year At SEK3.70

The board of AAK AB (publ.) (STO:AAK) has announced that it will be paying its dividend of SEK3.70 on the 16th of May, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 1.4%.

Check out our latest analysis for AAK AB (publ.)

AAK AB (publ.)'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. However, AAK AB (publ.)'s earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 8.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 31% by next year, which is in a pretty sustainable range.

AAK AB (publ.) Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of SEK0.875 in 2014 to the most recent total annual payment of SEK3.70. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

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 that AAK AB (publ.) has been growing its earnings per share at 18% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like AAK AB (publ.)'s Dividend

Overall, a dividend increase is always good, and we think that AAK AB (publ.) is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 AAK AB (publ.) analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is AAK AB (publ.) 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.