Wihlborgs Fastigheter (STO:WIHL) Is Increasing Its Dividend To SEK3.15

Wihlborgs Fastigheter AB (publ)'s (STO:WIHL) dividend will be increasing from last year's payment of the same period to SEK3.15 on 2nd of May. The payment will take the dividend yield to 3.3%, which is in line with the average for the industry.

View our latest analysis for Wihlborgs Fastigheter

Wihlborgs Fastigheter Is Paying Out More Than It Is Earning

Solid dividend yields are great, but they only really help us if the payment is sustainable. Even though Wihlborgs Fastigheter 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.

Over the next year, EPS is forecast to grow rapidly. If recent patterns in the dividend continues, we would start to get a bit worried, with the payout ratio possibly reaching 3,448%.

Wihlborgs Fastigheter Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of SEK1.06 in 2014 to the most recent total annual payment of SEK3.15. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Come By

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Over the past five years, it looks as though Wihlborgs Fastigheter's EPS has declined at around 9.4% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

Our Thoughts On Wihlborgs Fastigheter's Dividend

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, but we still think the dividend is a bit high for comfort. 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, Wihlborgs Fastigheter has 2 warning signs (and 1 which is significant) we think you should know about. Is Wihlborgs Fastigheter not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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