Brødrene A & O Johansen A/S (CPH:AOJ B) Will Pay A kr.3.00 Dividend In Two Days

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 Brødrene A & O Johansen A/S (CPH:AOJ B) is about to go ex-dividend in just 2 days. The ex-dividend date generally occurs two days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase Brødrene A & O Johansen's shares before the 24th of March in order to receive the dividend, which the company will pay on the 26th of March.

The company's next dividend payment will be kr.3.00 per share. Last year, in total, the company distributed kr.3.00 to shareholders. Calculating the last year's worth of payments shows that Brødrene A & O Johansen has a trailing yield of 3.3% on the current share price of kr.89.60. 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 Brødrene A & O Johansen has been able to grow its dividends, or if the dividend might be cut.

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. Brødrene A & O Johansen paid out a comfortable 50% of its profit last year. A useful secondary check can be to evaluate whether Brødrene A & O Johansen generated enough free cash flow to afford its dividend. Over the last year, it paid out dividends equivalent to 262% of what it generated in free cash flow, a disturbingly high percentage. It's pretty hard to pay out more than you earn, so we wonder how Brødrene A & O Johansen intends to continue funding this dividend, or if it could be forced to cut the payment.

While Brødrene A & O Johansen's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Brødrene A & O Johansen's ability to maintain its dividend.

View our latest analysis for Brødrene A & O Johansen

Click here to see how much of its profit Brødrene A & O Johansen 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 earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Brødrene A & O Johansen earnings per share are up 4.5% per annum over the last five years. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Brødrene A & O Johansen has delivered 22% dividend growth per year on average over the past eight years. 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

From a dividend perspective, should investors buy or avoid Brødrene A & O Johansen? Brødrene A & O Johansen has seen its earnings per share grow steadily and paid out less than half its profit over the last year. Unfortunately, its dividend was not well covered by free cash flow. In summary, it's hard to get excited about Brødrene A & O Johansen from a dividend perspective.

If you want to look further into Brødrene A & O Johansen, it's worth knowing the risks this business faces. Our analysis shows 2 warning signs for Brødrene A & O Johansen and you should be aware of them before buying any shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.