Is It Smart To Buy Skjern Bank A/S (CPH:SKJE) Before It Goes Ex-Dividend?

Readers hoping to buy Skjern Bank A/S (CPH:SKJE) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. This means that investors who purchase Skjern Bank's shares on or after the 4th of March will not receive the dividend, which will be paid on the 6th of March.

The company's next dividend payment will be kr.3.50 per share, on the back of last year when the company paid a total of kr.3.00 to shareholders. Based on the last year's worth of payments, Skjern Bank stock has a trailing yield of around 1.4% on the current share price of kr.209.00. If you buy this business for its dividend, you should have an idea of whether Skjern Bank's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Skjern Bank

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. Skjern Bank has a low and conservative payout ratio of just 11% of its income after tax.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Skjern Bank 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. Fortunately for readers, Skjern Bank's earnings per share have been growing at 16% 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. Skjern Bank's dividend payments are broadly unchanged compared to where they were six years ago.

To Sum It Up

From a dividend perspective, should investors buy or avoid Skjern Bank? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Skjern Bank looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Curious about whether Skjern Bank has been able to consistently generate growth? Here's a chart of its historical revenue and earnings growth.

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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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.