Platzer Fastigheter Holding (STO:PLAZ B) Is Increasing Its Dividend To SEK1.15

Platzer Fastigheter Holding AB (publ)'s (STO:PLAZ B) dividend will be increasing from last year's payment of the same period to SEK1.15 on 28th of September. This takes the annual payment to 3.3% of the current stock price, which is about average for the industry.

See our latest analysis for Platzer Fastigheter Holding

Platzer Fastigheter Holding Might Find It Hard To Continue The Dividend

We aren't too impressed by dividend yields unless they can be sustained over time. Platzer Fastigheter Holding is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in the business. In general, cash flows are more important than the more traditional measures of profit so we feel pretty 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 positive free cash flows give us some comfort, however, that the dividend could continue to be sustained.

Platzer Fastigheter Holding Is Still Building Its Track Record

Platzer Fastigheter Holding's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2014, the dividend has gone from SEK0.60 total annually to SEK2.30. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. Platzer Fastigheter Holding has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Company Could Face Some Challenges Growing The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Platzer Fastigheter Holding has seen EPS rising for the last five years, at 10% per annum. It's not great that the company is not turning a profit, but the decent growth in recent years is certainly a positive sign. As long as the company becomes profitable soon, it is on a trajectory that could see it being a solid dividend payer.

Our Thoughts On Platzer Fastigheter Holding's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Platzer Fastigheter Holding's payments are rock solid. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Platzer Fastigheter Holding you should be aware of, and 1 of them is significant. 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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