Wihlborgs Fastigheter (STO:WIHL) Will Pay A Larger Dividend Than Last Year At SEK3.15

The board of Wihlborgs Fastigheter AB (publ) (STO:WIHL) has announced that it will be paying its dividend of SEK3.15 on the 2nd of May, an increased payment from last year's comparable dividend. This takes the annual payment to 3.4% of the current stock price, which is about average for the industry.

See our latest analysis for Wihlborgs Fastigheter

Wihlborgs Fastigheter's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last payment, Wihlborgs Fastigheter's profits didn't cover the dividend, but the company was generating enough cash instead. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

Analysts expect a massive rise in earnings per share in the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 58% which is fairly sustainable.

Wihlborgs Fastigheter Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from SEK1.06 total annually to SEK3.15. This means that it has been growing its distributions at 11% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Earnings per share has been sinking by 51% over the last five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Our Thoughts On Wihlborgs Fastigheter's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Wihlborgs Fastigheter's payments are rock solid. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We don't think Wihlborgs Fastigheter 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. 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 4 warning signs (and 1 which is a bit concerning) 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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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.