What Makes Tieto Oyj (HEL:TIETO) A Great Dividend Stock?
Tieto Oyj (HEL:TIETO) is a true Dividend Rock Star. Its yield of 5.7% makes it one of the market’s top dividend payer. In the past ten years, Tieto Oyj has also grown its dividend from €0.50 to €1.4. Below, I have outlined more attractive dividend aspects for Tieto Oyj for income investors who may be interested in new dividend stocks for their portfolio.
Check out our latest analysis for Tieto Oyj
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically:
It is paying an annual yield above 75% of dividend payers
It consistently pays out dividend without missing a payment or significantly cutting payout
Its dividend per share amount has increased over the past
It can afford to pay the current rate of dividends from its earnings
It is able to continue to payout at the current rate in the future
High Yield And Dependable
Tieto Oyj’s yield sits at 5.7%, which is high for IT stocks. But the real reason Tieto Oyj stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. TIETO has increased its DPS from €0.50 to €1.4 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes TIETO a true dividend rockstar.
The current trailing twelve-month payout ratio for the stock is 71%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 79% which, assuming the share price stays the same, leads to a dividend yield of around 6.0%. However, EPS is forecasted to fall to €1.63 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Next Steps:
Tieto Oyj ticks all the boxes for what I look for in a dividend stock. If you are looking to build an income focused portfolio, this could be one to include. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three key factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for TIETO’s future growth? Take a look at our free research report of analyst consensus for TIETO’s outlook.
Valuation: What is TIETO worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether TIETO is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
