Platzer Fastigheter Holding's (STO:PLAZ B) Shareholders Will Receive A Smaller Dividend Than Last Year

Platzer Fastigheter Holding AB (publ)'s (STO:PLAZ B) dividend is being reduced from last year's payment covering the same period to SEK1.00 on the 3rd of April. This payment takes the dividend yield to 2.4%, which only provides a modest boost to overall returns.

See our latest analysis for Platzer Fastigheter Holding

Platzer Fastigheter Holding's Distributions May Be Difficult To Sustain

If it is predictable over a long period, even low dividend yields can be attractive. Even though Platzer Fastigheter Holding isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. 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.

Over the next year, EPS might fall by 5.7% based on recent performance. This means that the company will be unprofitable, but cash flows are more important when considering the dividend and as the current cash payout ratio is pretty healthy, we don't think there is too much reason to worry.

Platzer Fastigheter Holding Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was SEK0.60, compared to the most recent full-year payment of SEK2.00. This means that it has been growing its distributions at 13% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth Is Doubtful

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though Platzer Fastigheter Holding's EPS has declined at around 5.7% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

Our Thoughts On Platzer Fastigheter Holding's Dividend

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We don't think Platzer Fastigheter Holding is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Platzer Fastigheter Holding (of which 1 doesn't sit too well with us!) you should know about. 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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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.