There's A Lot To Like About Vestjysk Bank's (CPH:VJBA) Upcoming kr.0.419673 Dividend

Readers hoping to buy Vestjysk Bank A/S (CPH:VJBA) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. 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. Meaning, you will need to purchase Vestjysk Bank's shares before the 8th of March to receive the dividend, which will be paid on the 12th of March.

The company's upcoming dividend is kr.0.419673 a share, following on from the last 12 months, when the company distributed a total of kr.0.40 per share to shareholders. Looking at the last 12 months of distributions, Vestjysk Bank has a trailing yield of approximately 8.2% on its current stock price of kr.4.89. 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 Vestjysk Bank has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Vestjysk 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. Fortunately Vestjysk Bank's payout ratio is modest, at just 50% of profit.

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 Vestjysk 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Vestjysk Bank's earnings have been skyrocketing, up 23% per annum for the past five years.

Given that Vestjysk Bank has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Is Vestjysk Bank worth buying for its dividend? Companies like Vestjysk Bank that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Vestjysk Bank more closely.

So while Vestjysk Bank looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 2 warning signs for Vestjysk Bank that we strongly recommend you have a look at before investing in the company.

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.