Platzer Fastigheter Holding (STO:PLAZ B) Has Announced That It Will Be Increasing Its Dividend To SEK1.15

Platzer Fastigheter Holding AB (publ) (STO:PLAZ B) will increase its dividend from last year's comparable payment on the 28th of September to SEK1.15. Even though the dividend went up, the yield is still quite low at only 2.9%.

See our latest analysis for Platzer Fastigheter Holding

Platzer Fastigheter Holding Might Find It Hard To Continue The Dividend

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. While Platzer Fastigheter Holding 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. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Looking forward, earnings per share could rise by 10.4% over the next year if the trend from the last few years continues. It's nice to see things moving in the right direction, but this probably won't be enough for the company to turn a profit. The healthy cash flows are definitely as good sign, though so we wouldn't panic just yet, especially with the earnings growing.

Platzer Fastigheter Holding Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of SEK0.60 in 2014 to the most recent total annual payment of SEK2.30. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Company Could Face Some Challenges Growing The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Platzer Fastigheter Holding has grown earnings per share at 10% per year over the past five years. Even though the company isn't making a profit, strong earnings growth could turn that around in the near future. All is not lost, but the future of the dividend definitely rests upon the company's ability to become profitable soon.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Platzer Fastigheter Holding (1 can't be ignored!) that you should be aware of before investing. Is Platzer Fastigheter Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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