NoHo Partners Oyj (HEL:NOHO) Could Be A Buy For Its Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see NoHo Partners Oyj (HEL:NOHO) is about to trade ex-dividend in the next three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase NoHo Partners Oyj's shares before the 10th of November in order to be eligible for the dividend, which will be paid on the 18th of November.

The company's next dividend payment will be €0.08 per share, on the back of last year when the company paid a total of €0.23 to shareholders. Looking at the last 12 months of distributions, NoHo Partners Oyj has a trailing yield of approximately 3.1% on its current stock price of €7.54. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately NoHo Partners Oyj's payout ratio is modest, at just 42% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 17% of its free cash flow last year.

It's positive to see that NoHo Partners Oyj's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

View our latest analysis for NoHo Partners Oyj

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see NoHo Partners Oyj's earnings have been skyrocketing, up 51% per annum for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. NoHo Partners Oyj's dividend payments per share have declined at 1.6% per year on average over the past 10 years, which is uninspiring.

The Bottom Line

Should investors buy NoHo Partners Oyj for the upcoming dividend? It's great that NoHo Partners Oyj is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. There's a lot to like about NoHo Partners Oyj, and we would prioritise taking a closer look at it.

In light of that, while NoHo Partners Oyj has an appealing dividend, it's worth knowing the risks involved with this stock. Be aware that NoHo Partners Oyj is showing 2 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

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