Corem Property Group (STO:CORE A) Will Pay A Dividend Of SEK0.10

The board of Corem Property Group AB (publ) (STO:CORE A) has announced that it will pay a dividend on the 5th of July, with investors receiving SEK0.10 per share. The dividend yield will be 4.7% based on this payment which is still above the industry average.

View our latest analysis for Corem Property Group

Corem Property Group Might Find It Hard To Continue The Dividend

A big dividend yield for a few years doesn't mean much if it can't be sustained. While Corem Property Group is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. This gives us some comfort about the level of the dividend payments.

Over the next year, EPS could expand by 52.2% if recent trends continue. We like to see the company moving towards profitability, but this probably won't be enough for it to post positive net income this year. The healthy cash flows are definitely as good sign, though so we wouldn't panic just yet, especially with the earnings growing.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the annual payment back then was SEK0.109, compared to the most recent full-year payment of SEK0.40. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Corem Property Group has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Company Could Face Some Challenges Growing The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Corem Property Group has been growing its earnings per share at 52% a year over the past five years. While the company hasn't yet recorded a profit, the growth rates are healthy. If the company can turn a profit relatively soon, we can see this becoming a reliable income stock.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Corem Property Group's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would probably look elsewhere for an income investment.

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. To that end, Corem Property Group has 3 warning signs (and 1 which can't be ignored) we think you should know about. Is Corem Property Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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