Should You Buy Investment AB Öresund (publ) (STO:ORES) For Its Upcoming Dividend?
It looks like Investment AB Öresund (publ) (STO:ORES) is about to go ex-dividend in the next 3 days. 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. Thus, you can purchase Investment AB Öresund's shares before the 21st of October in order to receive the dividend, which the company will pay on the 27th of October.
The company's next dividend payment will be kr03.70 per share. Last year, in total, the company distributed kr7.40 to shareholders. Based on the last year's worth of payments, Investment AB Öresund has a trailing yield of 5.1% on the current stock price of kr0145.80. If you buy this business for its dividend, you should have an idea of whether Investment AB Öresund's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
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 Investment AB Öresund's payout ratio is modest, at just 27% of profit.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
View our latest analysis for Investment AB Öresund
Click here to see how much of its profit Investment AB Öresund paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Investment AB Öresund has grown its earnings rapidly, up 39% a year for the past five years.
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, Investment AB Öresund has lifted its dividend by approximately 5.1% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Investment AB Öresund is keeping back more of its profits to grow the business.
Final Takeaway
Has Investment AB Öresund got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Investment AB Öresund more closely.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For instance, we've identified 2 warning signs for Investment AB Öresund (1 makes us a bit uncomfortable) you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.