Skjern Bank A/S (CPH:SKJE) Passed Our Checks, And It's About To Pay A kr.5.00 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Skjern Bank A/S (CPH:SKJE) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Skjern Bank's shares before the 5th of March to receive the dividend, which will be paid on the 7th of March.

The company's next dividend payment will be kr.5.00 per share. Last year, in total, the company distributed kr.5.00 to shareholders. Based on the last year's worth of payments, Skjern Bank stock has a trailing yield of around 3.0% on the current share price of kr.167.50. If you buy this business for its dividend, you should have an idea of whether Skjern Bank's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Skjern Bank

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. Skjern Bank paid out just 19% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Skjern Bank paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 13% 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 has delivered 11% dividend growth per year on average over the past five years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Is Skjern Bank an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, Skjern Bank appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in Skjern Bank for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Skjern Bank you should be aware of.

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.