Nokia Oyj has announced that it will pay a dividend of 0.0325 euros per share on May 3rd. The dividend will have a yield of 3.9%, which is still above the industry average.
It is worth noting that while paying attractive dividends is a good practice, it is also important to consider if the payout is sustainable. Prior to this announcement, the company’s dividend was much higher than its earnings, which is not an ideal situation and could strain the balance sheet if continued.
Earnings per share are expected to increase by 171.1% next year. If the dividend continues the recent trends, the payout ratio is estimated to be 37%, which indicates that the dividend will be sustainable despite the currently high levels.
Nokia Oyj has had an unstable dividend history, including at least one cut in the past 10 years. The annual payout has increased from 0.11 euros in 2014 to the most recent full-year dividend of 0.13 euros. This represents an average annual dividend growth rate of 1.7% during this period. While modest dividend growth is noteworthy, it is overshadowed by the historical cuts in payouts. It is difficult to rely on dividend income if the company’s earnings are not stable.
Despite the growth in earnings per share, the historical fluctuations in dividends can pose a limitation. Nokia Oyj has seen an increase in EPS over the past five years, but it has also paid out a significant portion of its profits as dividends, which may make it challenging to sustain the payouts. Overall, we do not consider this company to be a great dividend stock, even if the dividend has not been cut this year.
Market movements demonstrate the importance of a stable dividend policy compared to one that is less predictable. However, investors should consider many other factors besides dividend payments when analyzing a company. Nokia Oyj has 2 warnings (and 1 that cannot be ignored) that are worth noting. If you are a dividend investor, you can also refer to our compiled list of high dividend yield stocks.
In summary:
– Nokia Oyj will pay a dividend of 0.0325 euros per share.
– The dividend will have a yield of 3.9%, which is still above the industry average.
– The sustainability of the dividend payout is questionable due to the company’s past high dividends compared to earnings.
– Earnings per share are expected to increase significantly next year.
– Nokia Oyj has had an unstable dividend history, including previous cuts.
– The company may not be a great dividend stock due to historical fluctuations in dividends.
– A stable dividend policy is important, but other factors should also be considered when analyzing a company.
Definitions:
– Dividend: Cash payment made by a company to its shareholders, proportionally to their ownership in the company’s capital.
– Dividend yield: Ratio calculated as the dividend divided by the share price, expressed as a percentage.
– Dividend payout: Cash payment made by a company to its shareholders.
– Payout ratio: Ratio of dividend payments to net profit.
– EPS (earning per share): Net profit attributable to each outstanding share.
Related links:
– Nokia Oyj’s homepage
The source of the article is from the blog kunsthuisoaleer.nl