Uponor Oyj (HEL:UPONOR) Pays A €0.26 Dividend In Just 3 Days
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Uponor Oyj (HEL:UPONOR) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 17th of March in order to be eligible for this dividend, which will be paid on the 25th of March.
Uponor Oyj's next dividend payment will be €0.26 per share. Last year, in total, the company distributed €0.53 to shareholders. Based on the last year's worth of payments, Uponor Oyj stock has a trailing yield of around 5.5% on the current share price of €9.56. If you buy this business for its dividend, you should have an idea of whether Uponor Oyj's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
Check out our latest analysis for Uponor Oyj
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Uponor Oyj paid out more than half (74%) of its earnings last year, which is a regular payout ratio for most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 45% of its free cash flow as dividends, a comfortable payout level for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Uponor Oyj, with earnings per share up 7.3% on average over the last five years. Decent historical earnings per share growth suggests Uponor Oyj has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, ten years ago, Uponor Oyj has lifted its dividend by approximately 0.6% a year on average.
To Sum It Up
Has Uponor Oyj got what it takes to maintain its dividend payments? Earnings per share growth has been modest and Uponor Oyj paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. To summarise, Uponor Oyj looks okay on this analysis, although it doesn't appear a stand-out opportunity.
In light of that, while Uponor Oyj has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Uponor Oyj has 3 warning signs we think you should be aware of.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
