Detection Technology Oyj (HEL:DETEC) has announced that it will be paying a dividend of €0.50 on April 7th, which is an increase from last year’s dividend. This will bring the annual payment to 3.2% of the stock price, higher than what most companies in the industry pay.
Prior to this announcement, the company’s dividend was comfortably covered by cash flow and earnings, indicating sustainability. The projected earnings for the next year show a growth of 46.0%, which could result in a sustainable payout ratio of 42% by next year. However, the company’s dividend track record has not been consistent, with cuts in the past.
While the company has shown promising growth in dividends, its earnings per share has declined by approximately 2.7% per year over the past five years. This makes it unlikely for the dividend to grow in the future unless this trend is reversed. While the dividend is well covered by cash flows in the short term, it may not be a great income stock for investors focusing on steady income.
Investors should consider that companies with a consistent dividend policy generate greater confidence, and dividends are not the only factor to consider when assessing a company. Overall, Detection Technology Oyj may not be the best choice for income-focused investors, but it’s important to consider all factors before making investment decisions.
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