Bokusgruppen's (STO:BOKUS) Dividend Will Be 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 6.6% of the stock price, which is above what most companies in the industry pay.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Bokusgruppen's stock price has increased by 51% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Bokusgruppen

Bokusgruppen's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. 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%. 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.

EPS is set to grow by 54.8% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 92% 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. The annual payment during the last 2 years was SEK3.00 in 2022, and the most recent fiscal year payment was SEK3.30. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

Bokusgruppen Might Find It Hard To Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Bokusgruppen has seen EPS rising for the last five years, at 55% per annum. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

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 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. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Bokusgruppen that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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