On the 07 May 2019, Huhtamäki Oyj (HEL:HUH1V) will be paying shareholders an upcoming dividend amount of €0.84 per share. However, investors must have bought the company's stock before 26 April 2019 in order to qualify for the payment. That means you have only 1 days left! What does this mean for current shareholders and potential investors? Below, I will explain how holding Huhtamäki Oyj can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes.
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does Huhtamäki Oyj fare?
Huhtamäki Oyj has a trailing twelve-month payout ratio of 56%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 44% which, assuming the share price stays the same, leads to a dividend yield of around 3.0%. However, EPS should increase to €1.96, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it's dividend stocks and their constant income stream. In the case of HUH1V it has increased its DPS from €0.34 to €0.84 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, Huhtamäki Oyj has a yield of 2.6%, which is on the low-side for Packaging stocks.
With these dividend metrics in mind, I definitely rank Huhtamäki Oyj as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I've compiled three pertinent aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for HUH1V’s future growth? Take a look at our free research report of analyst consensus for HUH1V’s outlook.
- Valuation: What is HUH1V 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 HUH1V is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Thank you for reading.