Bokusgruppen (STO:BOKUS) Is Paying Out A Dividend Of SEK1.50

Bokusgruppen AB (publ) (STO:BOKUS) will pay a dividend of SEK1.50 on the 15th of November. This means the annual payment is 9.9% of the current stock price, which is above the average for the industry.

View our latest analysis for Bokusgruppen

Bokusgruppen's Earnings Easily Cover The Distributions

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 646% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 36%. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.

The next 12 months could see EPS growing very rapidly. If the dividend continues along recent trends, we estimate the payout ratio could reach 87%, which is on the higher side, but certainly feasible.

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. There hasn't been much of a change in the dividend over the last 2 years. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

There Isn't Much Room To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Bokusgruppen has seen EPS rising for the last five years, at 7.7% per annum. While EPS is growing at a decent rate, but future growth could be limited by the amount of earnings being paid out to shareholders.

Our Thoughts On Bokusgruppen's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Bokusgruppen's payments, as there could be some issues with sustaining them into the future. 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 probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 4 warning signs for Bokusgruppen that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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