Platzer Fastigheter Holding's (STO:PLAZ B) Dividend Will Be Increased 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 3.2% 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

Unless the payments are sustainable, the dividend yield doesn't mean too much. Even though Platzer Fastigheter Holding isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. This gives us some comfort about the level of the dividend payments.

Assuming the trend of the last few years continues, EPS will grow by 10.4% over the next 12 months. 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.

Platzer Fastigheter Holding Is Still Building Its Track Record

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. Since 2014, the annual payment back then was SEK0.60, compared to the most recent full-year payment of 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

The company's investors will be pleased to have been receiving dividend income for some time. Platzer Fastigheter Holding has impressed us by growing EPS at 10% per year over the past five years. It's not great that the company is not turning a profit, but the decent growth in recent years is certainly a positive sign. All is not lost, but the future of the dividend definitely rests upon the company's ability to become profitable soon.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Platzer Fastigheter Holding will make a great income stock. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think Platzer Fastigheter Holding is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Platzer Fastigheter Holding has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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