The advice of Kamux Oyj (HEL: KAMUX) has announced that it will increase its dividend on October 29 to â¬ 0.13. Although the dividend is now higher, the yield is only 1.4%, which is lower than the industry average.
Check out our latest review for Kamux Oyj
Kamux Oyj’s dividend is well covered by profits
It would be nice if the yield was higher, but we should also check whether higher levels of dividend payouts would be sustainable. Kamux Oyj earns easily enough to cover the dividend, but is held back by poor cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
Next year, EPS is expected to increase by 11.7%. If the dividend continues according to recent trends, we estimate that the payout ratio will be 45%, which is in a range that makes us comfortable with the sustainability of the dividend.
Kamux Oyj does not have a long payment history
The dividend has been fairly stable in hindsight, but the company hasn’t paid any for a very long time. It is therefore difficult to judge how it would behave throughout a full economic cycle. The first annual payment over the past 3 years was â¬ 0.12 in 2018, and the last payment for the year was â¬ 0.24. This means that he increased his distributions by 26% per year during that period. It’s always nice to see strong dividend growth, but with such a short payment history we wouldn’t be inclined to rely on it until a longer history has been developed.
The dividend seems likely to increase
Investors might be attracted to the stock depending on the quality of its payment history. Kamux Oyj has seen his BPA increase over the past five years, at 15% per year. The growth in EPS bodes well for the dividend, as does the low payout ratio the company is currently reporting.
Overall, we still like to see the dividend go up, but we don’t think Kamux Oyj will be a great income security. While Kamux Oyj earns enough to cover the payments, the cash flow is lacking. We would be a little cautious if we were relying on this security primarily for dividend income.
Investors generally tend to favor companies with a consistent and stable dividend policy over those that operate irregularly. At the same time, there are other factors that our readers should be aware of before investing any capital in a stock. For example, we have selected 1 warning sign for Kamux Oyj that investors should consider. We have also set up a list of global stocks with a solid dividend.
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