Creades AB (STO:CRED A) Will Pay A kr00.40 Dividend In Three Days
Readers hoping to buy Creades AB (STO:CRED A) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Creades investors that purchase the stock on or after the 27th of October will not receive the dividend, which will be paid on the 2nd of November.
The company's next dividend payment will be kr00.40 per share, and in the last 12 months, the company paid a total of kr1.60 per share. Calculating the last year's worth of payments shows that Creades has a trailing yield of 1.9% on the current share price of kr083.20. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Creades can afford its dividend, and if the dividend could grow.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Creades has a low and conservative payout ratio of just 9.3% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
View our latest analysis for Creades
Click here to see how much of its profit Creades paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're discomforted by Creades's 10% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Creades has lifted its dividend by approximately 1.3% a year on average.
The Bottom Line
Should investors buy Creades for the upcoming dividend? Creades's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.
If you're not too concerned about Creades's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Every company has risks, and we've spotted 2 warning signs for Creades (of which 1 makes us a bit uncomfortable!) you should know about.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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