Opter's (STO:OPTER) Upcoming Dividend Will Be Larger Than Last Year's

The board of Opter AB (publ) (STO:OPTER) has announced that it will be paying its dividend of SEK2.91 on the 5th of May, an increased payment from last year's comparable dividend. This takes the dividend yield to 2.8%, which shareholders will be pleased with.

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Opter's Projected Earnings Seem Likely To Cover Future Distributions

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 100% of what it was earning. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

Over the next year, EPS could expand by 34.4% if recent trends continue. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 74% which brings it into quite a comfortable range.

View our latest analysis for Opter

Opter Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2022, the dividend has gone from SEK1.15 total annually to SEK2.91. This means that it has been growing its distributions at 36% per annum over that time. Opter has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Opter Might Find It Hard To Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Opter has impressed us by growing EPS at 34% per year over the past three years. 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.

The Dividend Could Prove To Be Unreliable

Overall, we always like to see the dividend being raised, but we don't think Opter will make a great income stock. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for Opter (2 make us uncomfortable!) that you should be aware of before investing. Is Opter not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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