Mycronic (STO:MYCR) Is Increasing Its Dividend To SEK7.50

Mycronic AB (publ)'s (STO:MYCR) dividend will be increasing from last year's payment of the same period to SEK7.50 on 14th of May. Based on this payment, the dividend yield for the company will be 1.5%, which is fairly typical for the industry.

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Mycronic's Projected Earnings Seem Likely To Cover Future Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Mycronic's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 28.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 38% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Mycronic

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2015, the annual payment back then was SEK4.00, compared to the most recent full-year payment of SEK5.50. This means that it has been growing its distributions at 3.2% per annum 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

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Mycronic has grown earnings per share at 14% per year over the past five years. Mycronic definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Mycronic Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Mycronic is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 Mycronic analysts we track are forecasting continued growth with our free report on analyst estimates for the company . Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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