Income Investors Should Know That Nivika Fastigheter AB (publ) (STO:NIVI B) Goes Ex-Dividend Soon

It looks like Nivika Fastigheter AB (publ) (STO:NIVI B) is about to go ex-dividend in the next four days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Nivika Fastigheter's shares on or after the 13th of November, you won't be eligible to receive the dividend, when it is paid on the 19th of November.

The company's next dividend payment will be kr00.18 per share, on the back of last year when the company paid a total of kr0.72 to shareholders. Based on the last year's worth of payments, Nivika Fastigheter has a trailing yield of 1.9% on the current stock price of kr038.10. If you buy this business for its dividend, you should have an idea of whether Nivika Fastigheter's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's 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. Nivika Fastigheter paid out just 17% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Luckily it paid out just 13% of its free cash flow last year.

It's positive to see that Nivika Fastigheter'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.

Check out our latest analysis for Nivika Fastigheter

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

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Nivika Fastigheter's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last two years, Nivika Fastigheter has lifted its dividend by approximately 6.1% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid Nivika Fastigheter? Earnings per share have been flat, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend gets cut. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

In light of that, while Nivika Fastigheter has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 3 warning signs for Nivika Fastigheter (2 are a bit concerning!) that deserve your attention before investing in the shares.

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