Interested In Skåne-möllan's (STO:SKMO) Upcoming kr01.40 Dividend? You Have Three Days Left

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Skåne-möllan AB (publ) (STO:SKMO) is about to go ex-dividend in just three days. The ex-dividend date is one business day 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 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 Skåne-möllan's shares before the 18th of April in order to be eligible for the dividend, which will be paid on the 24th of April.

The company's upcoming dividend is kr01.40 a share, following on from the last 12 months, when the company distributed a total of kr1.40 per share to shareholders. Last year's total dividend payments show that Skåne-möllan has a trailing yield of 2.3% on the current share price of kr061.80. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Skåne-möllan has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Skåne-möllan

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. Last year, Skåne-möllan paid out 104% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 46% of its free cash flow in the past year.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Skåne-möllan fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Very few companies are able to sustainably pay dividends larger than their reported earnings.

Click here to see how much of its profit Skåne-möllan 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Skåne-möllan, with earnings per share up 9.3% on average over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Skåne-möllan's dividend payments are broadly unchanged compared to where they were 10 years ago.

To Sum It Up

From a dividend perspective, should investors buy or avoid Skåne-möllan? Skåne-möllan has been steadily growing its earnings per share, and it is paying out just 46% of its cash flow but an uncomfortably high 104% of its income. Overall, it's hard to get excited about Skåne-möllan from a dividend perspective.

However if you're still interested in Skåne-möllan as a potential investment, you should definitely consider some of the risks involved with Skåne-möllan. Case in point: We've spotted 3 warning signs for Skåne-möllan 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.