What To Know Before Buying Swedish Match AB (publ) (STO:SWMA) For Its Dividend
Swedish Match AB (publ) (STO:SWMA) has pleased shareholders over the past 10 years, paying out an average dividend of 3.00% annually. The company is currently worth kr77.89b, and now yields roughly 2.14%. Does Swedish Match tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for Swedish Match
How I analyze a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is their annual yield among the top 25% of dividend payers?
Does it consistently pay out dividends without missing a payment of significantly 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?
How well does Swedish Match fit our criteria?
The company currently pays out 50.68% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect SWMA’s payout to remain around the same level at 51.85% of its earnings, which leads to a dividend yield of around 2.72%. Furthermore, EPS should increase to SEK19.74.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. SWMA has increased its DPS from SEK3.5 to SEK9.2 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Swedish Match has a yield of 2.14%, which is on the low-side for Tobacco stocks.
Next Steps:
With this in mind, I definitely rank Swedish Match as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three important factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for SWMA’s future growth? Take a look at our free research report of analyst consensus for SWMA’s outlook.
Valuation: What is SWMA 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 SWMA is currently mispriced by the market.
Other 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 pass 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.
