Holmen AB's Dividend Analysis

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Tue, Apr 16, 2024, 5:02 AM 4 min read

Assessing the Sustainability of Holmen AB's Upcoming Dividend

Holmen AB (HLMMF) recently announced a dividend of $8.5 per share, payable on 2024-04-23, with the ex-dividend date set for 2024-04-17. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Holmen AB's dividend performance and assess its sustainability.

What Does Holmen AB Do?

Warning! GuruFocus has detected 7 Warning Signs with HLMMF.
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Holmen AB produces and sells timber, wood products, a variety of paper products, and electricity generated through renewable energy sources. The company organizes itself into five segments based on product type: Forest, Paperboard, Paper, Wood Products, and Renewable Energy. The company's product portfolio includes logs, biofuel, paperboard for consumer packaging, paper for books, construction timber, and renewable energy from hydro and wind power. The company's customer segment is composed of printing firms, sawmills, pulp mills, paper mills, the construction industry, and the packaging industry, among others. The vast majority of revenue comes from the company's paper and paperboard segments combined, and it earns the majority of its revenue in Europe.

A Glimpse at Holmen AB's Dividend History

Holmen AB has maintained a consistent dividend payment record since 2023. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Holmen AB's Dividend Yield and Growth

As of today, Holmen AB currently has a 12-month trailing dividend yield of 1.93% and a 12-month forward dividend yield of 2.04%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Holmen AB's annual dividend growth rate was 31.70%. Extended to a five-year horizon, this rate decreased to 6.10% per year. And over the past decade, Holmen AB's annual dividends per share growth rate stands at 5.00%. Based on Holmen AB's dividend yield and five-year growth rate, the 5-year yield on cost of Holmen AB stock as of today is approximately 2.59%.

The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Holmen AB's dividend payout ratio is 0.35. Holmen AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Holmen AB's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Holmen AB's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Holmen AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Holmen AB's revenue has increased by approximately 12.10% per year on average, a rate that outperforms approximately 70.91% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Holmen AB's earnings increased by approximately 24.50% per year on average, a rate that outperforms approximately 67.5% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 4.80%, which outperforms approximately 45.86% of global competitors.

Next Steps

With Holmen AB's consistent dividend history, promising yield and growth rates, prudent payout ratio, and strong profitability, the company's dividends appear sustainable. These factors, coupled with robust growth metrics, provide a positive outlook for Holmen AB's ability to maintain and potentially increase its dividend payouts in the future. Investors should consider the company's stable financial health and growth prospects when evaluating Holmen AB as a potential addition to their income-generating portfolio. For those seeking to discover more high-dividend yield opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.

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