Fenix Outdoor International's (STO:FOI B) Upcoming Dividend Will Be Larger Than Last Year's

By
Simply Wall St
Published
April 28, 2022
OM:FOI B
Source: Shutterstock

Fenix Outdoor International AG (STO:FOI B) has announced that it will be increasing its dividend on the 4th of May to kr20.00. Even though the dividend went up, the yield is still quite low at only 3.1%.

See our latest analysis for Fenix Outdoor International

Fenix Outdoor International Is Paying Out More Than It Is Earning

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. The last dividend was quite easily covered by Fenix Outdoor International's earnings. This means that a large portion of its earnings are being retained to grow the business.

The next 12 months is set to see EPS grow by 46.2%. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.

historic-dividend
OM:FOI B Historic Dividend April 28th 2022

Fenix Outdoor International's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2015, the dividend has gone from €0.42 to €1.84. This works out to be a compound annual growth rate (CAGR) of approximately 24% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Fenix Outdoor International has only grown its earnings per share at 3.4% per annum over the past five years. Growth of 3.4% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

Our Thoughts On Fenix Outdoor International's Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Fenix Outdoor International that you should be aware of before investing. Is Fenix Outdoor International not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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