Bokusgruppen (STO:BOKUS) Will Pay A Dividend Of SEK1.50

Bokusgruppen AB (publ) (STO:BOKUS) will pay a dividend of SEK1.50 on the 15th of November. The dividend yield will be 9.6% based on this payment which is still above the industry average.

Check out our latest analysis for Bokusgruppen

Bokusgruppen's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. 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%. 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.

The next 12 months could see EPS growing very rapidly. If the dividend continues along recent trends, we believe we could see the payout ratio reaching 87%, which is definitely on the higher side, but still sustainable.

Bokusgruppen Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Bokusgruppen May Have Challenges Growing The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Bokusgruppen has impressed us by growing EPS at 7.7% per year over the past five years. While EPS is growing at a decent rate, but future growth could be limited by the amount of earnings being paid out to shareholders.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. 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.

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. For example, we've picked out 4 warning signs for Bokusgruppen that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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