Per Aarsleff Holding A/S (CPH:PAAL B) Passed Our Checks, And It's About To Pay A kr.6.50 Dividend

It looks like Per Aarsleff Holding A/S (CPH:PAAL B) is about to go ex-dividend in the next three days. Investors can purchase shares before the 28th of January in order to be eligible for this dividend, which will be paid on the 1st of February.

Per Aarsleff Holding's next dividend payment will be kr.6.50 per share, and in the last 12 months, the company paid a total of kr.6.50 per share. Based on the last year's worth of payments, Per Aarsleff Holding stock has a trailing yield of around 2.1% on the current share price of DKK310. 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 Per Aarsleff Holding has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Per Aarsleff Holding

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Per Aarsleff Holding paid out a comfortable 35% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The good news is it paid out just 10% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that Per Aarsleff Holding's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share. Recent growth has not been impressive. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Per Aarsleff Holding has lifted its dividend by approximately 30% a year on average.

The Bottom Line

Is Per Aarsleff Holding worth buying for its dividend? The company has barely grown earnings per share over this time, but at least it's paying out a decently low percentage of its earnings and cashflow as dividends. This could suggest management is reinvesting in future growth opportunities. Generally we like to see both low payout ratios and strong earnings per share growth, but Per Aarsleff Holding is halfway there. Overall we think this is an attractive combination and worthy of further research.

Curious what other investors think of Per Aarsleff Holding? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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