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

Bokusgruppen AB (publ) (STO:BOKUS) has announced that it will pay a dividend of SEK1.65 per share on the 13th of November. This takes the dividend yield to 6.9%, which shareholders will be pleased with.

View our latest analysis for Bokusgruppen

Bokusgruppen's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Bokusgruppen's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

Earnings per share is forecast to rise by 60.7% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 88% which is a bit high but can definitely be sustainable.

Bokusgruppen Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2022, the annual payment back then was SEK3.00, compared to the most recent full-year payment of SEK3.30. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. 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's Dividend Might Lack Growth

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Bokusgruppen has seen EPS rising for the last five years, at 55% per annum. While EPS is growing rapidly, Bokusgruppen paid out a very high 116% of its income as dividends. If earnings continue to grow, this dividend may be sustainable, but we think a payout this high definitely bears watching.

Our Thoughts On Bokusgruppen's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Bokusgruppen's payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Bokusgruppen that investors should take into consideration. Is Bokusgruppen not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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