Micro Systemation (STO:MSAB B) Is Paying Out A Dividend Of SEK1.00

Micro Systemation AB (publ) (STO:MSAB B) will pay a dividend of SEK1.00 on the 21st of May. The dividend yield will be 3.0% based on this payment which is still above the industry average.

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Micro Systemation's Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Micro Systemation's dividend made up quite a large proportion of earnings but only 69% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to rise by 70.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 44%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Micro Systemation

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of SEK1.00 in 2015 to the most recent total annual payment of SEK1.50. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Micro Systemation has impressed us by growing EPS at 49% per year over the past five years. However, Micro Systemation isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

Micro Systemation Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for Micro Systemation that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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