Know This Before Buying F-Secure Oyj (HEL:FSC1V) For Its Dividend
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, F-Secure Oyj (HEL:FSC1V) has been paying a dividend to shareholders. Today it yields 1.7%. Let’s dig deeper into whether F-Secure Oyj should have a place in your portfolio.
View our latest analysis for F-Secure Oyj
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has the amount of dividend per share grown over the past?
Is is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
Does F-Secure Oyj pass our checks?
The current trailing twelve-month payout ratio for FSC1V is 173%, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect FSC1V’s payout to fall into a more sustainable range of 66% of its earnings, which leads to a dividend yield of 2.0%. Moreover, EPS should increase to €0.036, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Dividend payments from F-Secure Oyj have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
In terms of its peers, F-Secure Oyj produces a yield of 1.7%, which is high for Software stocks but still below the low risk savings rate.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in F-Secure Oyj for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three essential aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for FSC1V’s future growth? Take a look at our free research report of analyst consensus for FSC1V’s outlook.
Valuation: What is FSC1V worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FSC1V is currently mispriced by the market.
Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
