Akelius Residential Property AB (publ) (STO:AKEL D) has announced that it will pay a dividend of €0.025 per share on the 12th of February. The dividend yield will be 6.5% based on this payment which is still above the industry average.
Check out our latest analysis for Akelius Residential Property
Akelius Residential Property Might Find It Hard To Continue The Dividend
A big dividend yield for a few years doesn’t mean much if it can’t be sustained. Akelius Residential Property is unprofitable despite paying a dividend, and it is paying out 485% of its free cash flow. This makes us feel that the dividend will be hard to maintain.
Recent, EPS has fallen by 72.2%, so this could continue over the next year. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.
Akelius Residential Property Doesn’t Have A Long Payment History
Looking back, the dividend has been stable, but the company hasn’t been paying a dividend for very long so we can’t be confident that the dividend will remain stable through all economic environments. The most recent annual payment of €0.10 is about the same as the annual payment 4 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn’t want to rely on this dividend too much.
Dividend Growth Potential Is Shaky
Investors could be attracted to the stock based on the quality of its payment history. However, initial appearances might be deceiving. Over the past five years, it looks as though Akelius Residential Property’s EPS has declined at around 72% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.
We’re Not Big Fans Of Akelius Residential Property’s Dividend
In summary, while it is good to see that the dividend hasn’t been cut, we think that at current levels the payment isn’t particularly sustainable. The company’s earnings aren’t high enough to be making such big distributions, and it isn’t backed up by strong growth or consistency either. Overall, this doesn’t get us very excited from an income standpoint.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we’ve picked out 3 warning signs for Akelius Residential Property that investors should know about before committing capital to this stock. Is Akelius Residential Property not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Valuation is complex, but we’re helping make it simple.
Find out whether Akelius Residential Property is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
