Established in Arendal in 1962, Kitron has a long track record within the manufacturing of high-complexity, high-reliability electronic products. It is expanding its global presence with manufacturing facilities in Norway, Sweden, Lithuania, Germany, Poland, China and the U.S. Its customers outsource manufacturing of electronic circuit boards and related services to improve flexibility, cost efficiency, accuracy and innovation. The company has a reputable customer base, including companies like Kongsberg Gruppen, Northrop Grumman, Saab, Volvo, Lockheed Martin, ABB.

Segment overview

The company operates within five different segments; Defence/aerospace, Energy/telecoms, Industry, Medical devices and Offshore/marine. Below is an overview of split in revenues per segment.

Source: Company presentation Q3


The company’s dividend history is not too long, but they have paid a consecutive dividend the past five years and has a high dividend growth rate (extraordinary dividend of 0.2 NOK paid out in 2018 based on 2017 financials). Kitron’s dividend policy is to pay out an annual dividend of at least 50 % of the company’s consolidated net profit before non-recurring items. The EPS as per 30 September 2019 is 0.55 NOK and it is estimated that the full-year EPS will be around 0.8 NOK.

Today the current yield is around 4.3% (share price 9.38 NOK), but I expect that the dividend for the fiscal year 2019 to be 0.50 NOK; implying a forward yield of 5.3%. The payout ratio is approximately 55%, which I believe is OK for this type of company.


Growth and EBIT-margin

On the latest Capital Markets Day (CMD) the company launched a revenue target for 2025 of NOK 5 billion and EBIT margin of 7%, with potential M&A adding upside. This implies an EBIT’25e of NOK 350m, representing a solid CAGR’19-25e of 10% (Source: Kitron CMD and Pareto Equity Research).

Source: Kitron CMD
Source: Kitron CMD


The stock price for Kitron ASA has since a low of 1.51 NOK per share increased to today’s price of 9.38 NOK per share. This increase is well justified due to the strong revenue growth and improving EBIT-margin, and there isupside potential if the company’s targets are reached. These are the key drivers for value creation for shareholders and one should expect accretive acquisitions going forward based upon the communication to the market by the management on the Capital Market Day.

Comparing EV/EBIT to its closest Nordic Competitors; NOTE AB and Scanfil Oyj, it is trading at a premium. EV/EBIT for Note is 11.6, while Scanfil trades at 10.3.


Disclaimer: I hold a position in Kitron ASA.

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August is still not over, but I will not receive any more dividends this month. Last year the dividend in August ended on 215 NOK, and was crushed by the dividend received this year. 1255 NOK was received this August and brings this year’s total to 14 724 NOK and closer to my target of 20 000 NOK for 2019.

This month I received my monthly dividend from Transalta Renewables* as well as the quarterly dividends from AbbVie*, AkerBP and Equinor. The current dividend yield for my portfolio is 4.1% (up from 3.9% last month due to the switch between Scanship Holding and Equinor).

Equinor was included in the portfolio this month due to its high free cash flow and dividend yield, consistent dividends over the years, future optimistic prospects with Johan Sverdrup coming into play and the cheap valuation.

Scanship Holding was offloaded this month due to the increased volatility in the stock. The company is well managed and is backed by a megatrend of cleaner oceans, but I don’t want a company in my DIVIDEND portfolio where the share price loses 40% of its share price in one trading day. This is also one of my criteria when I choose to sell a stock.

*Dividends received are not adjusted for withholding tax deducted, which means that my broker withholds tax on share dividends (15% for countries with a tax treaty with Norway), which is subsequently paid out the next year. This will understate the dividend income updates and my annual portfolio return, but over the long run the effect in percent of total holdings goes down.

Every month I will post an update on my dividend update. Here you can find last the update for July. Subscribe below to receive a notification when a new post is out.

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Today I bought my first 150 shares in Equinor (buy and build) because of the attractive valuation of the company at these levels.

The dividend yield at current level is approx 5.5% and I expect the dividend to increase the next couple of years due to the oil and gas – field “Johan Sverdrup” coming into production. This will add an estimated NOK 1275 to my annual dividend income and increases the yield in my portfolio from 3.9% to 4.0%.

Comment from Pareto Securities (analysis dated 25 July 2019):

Q2 results were well below market expectations but fairly in line with our estimates. With what were known to be a weak quarter now behind us, we believe focus will shift to Equinor’s industry leading 2020-21e FCF yield of 11% (Brent USD 65/bbl) post Sverdrup production start later this year. We reiterate our BUY recommendation and TP of NOK 240.

Dividends in July are all accounted for and booked.

Total dividend received in July was NOK 552 (not adjusted for witholding tax deducted). I received dividends from Hemfosa, Brookfield Renewable Partners and Transalta Renewables.

Total dividend received YTD is NOK 13 469 (not adjusted for witholding tax deducted) and I’m already ahead of dividends received last year which ended on NOK 11 000. For 2019 I expect to receive approximately NOK 20 000 in dividends.

Dividend yield: 3.9%

Yield on cost: 4.1%

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