Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that United Bankers Oyj (HEL:UNIAV) is about to go ex-dividend in just 4 days. If you purchase the stock on or after the 1st of April, you won’t be eligible to receive this dividend, when it is paid on the 9th of April.
United Bankers Oyj’s next dividend payment will be €0.43 per share, and in the last 12 months, the company paid a total of €0.43 per share. Based on the last year’s worth of payments, United Bankers Oyj has a trailing yield of 5.8% on the current stock price of €7.4. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether United Bankers Oyj can afford its dividend, and if the dividend could grow.
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. Last year, United Bankers Oyj paid out 97% of its income as dividends, which is above a level that we’re comfortable with, especially if the company needs to reinvest in its business.
When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it’s a relief to see United Bankers Oyj earnings per share are up 5.3% per annum over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past five years, United Bankers Oyj has increased its dividend at approximately 9.3% a year on average. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
The Bottom Line
Has United Bankers Oyj got what it takes to maintain its dividend payments? While we like that its earnings are growing somewhat, we’re not enamored that it’s paying out 97% of last year’s earnings. These characteristics don’t generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.
Although, if you’re still interested in United Bankers Oyj and want to know more, you’ll find it very useful to know what risks this stock faces. Our analysis shows 4 warning signs for United Bankers Oyj and you should be aware of these before buying any shares.
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting 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 firstname.lastname@example.org. 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.
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