Be Sure To Check Out Sydbank A/S (CPH:SYDB) Before It Goes Ex-Dividend

By
Simply Wall St
Published
March 21, 2022
CPSE:SYDB
Source: Shutterstock

Sydbank A/S (CPH:SYDB) stock is about to trade ex-dividend in 3 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Sydbank's shares before the 25th of March in order to receive the dividend, which the company will pay on the 29th of March.

The company's next dividend payment will be kr.12.00 per share, on the back of last year when the company paid a total of kr.12.00 to shareholders. Last year's total dividend payments show that Sydbank has a trailing yield of 5.2% on the current share price of DKK230.6. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Sydbank has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Sydbank

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. Sydbank paid out 52% of its earnings to investors last year, a normal payout level for most businesses. Sydbank paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
CPSE:SYDB Historic Dividend March 21st 2022

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 Sydbank, with earnings per share up 2.4% on average over the last 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, seven years ago, Sydbank has lifted its dividend by approximately 7.8% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Should investors buy Sydbank for the upcoming dividend? Sydbank has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. It doesn't appear an outstanding opportunity, but could be worth a closer look.

However if you're still interested in Sydbank as a potential investment, you should definitely consider some of the risks involved with Sydbank. In terms of investment risks, we've identified 2 warning signs with Sydbank and understanding them should be part of your investment process.

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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