Bokusgruppen (STO:BOKUS) Is Due To Pay A Dividend Of SEK1.65

The board of Bokusgruppen AB (publ) (STO:BOKUS) has announced that it will pay a dividend of SEK1.65 per share on the 13th of November. This will take the annual payment to 7.1% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Bokusgruppen

Bokusgruppen's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, the company was paying out 116% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 23%. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor.

Earnings per share is forecast to rise by 54.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 92%, which is on the higher side, but certainly still feasible.

Bokusgruppen Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The dividend has gone from an annual total of SEK3.00 in 2022 to the most recent total annual payment of SEK3.30. This works out to be a compound annual growth rate (CAGR) of approximately 4.9% a year over that time. Bokusgruppen hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Bokusgruppen Might Find It Hard To Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Bokusgruppen has impressed us by growing EPS at 55% per year over the past five years. EPS has been growing well, but Bokusgruppen has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Bokusgruppen'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. Overall, we don't think this company has the makings of a good income stock.

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. As an example, we've identified 2 warning signs for Bokusgruppen that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com