There's A Lot To Like About Ålandsbanken Abp's (HEL:ALBAV) Upcoming €2.65 Dividend

Ålandsbanken Abp (HEL:ALBAV) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. Therefore, if you purchase Ålandsbanken Abp's shares on or after the 27th of March, you won't be eligible to receive the dividend, when it is paid on the 8th of April.

The company's upcoming dividend is €2.65 a share, following on from the last 12 months, when the company distributed a total of €2.65 per share to shareholders. Calculating the last year's worth of payments shows that Ålandsbanken Abp has a trailing yield of 7.0% on the current share price of €37.80. 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! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Ålandsbanken Abp

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 75% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline.

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 Ålandsbanken Abp paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Ålandsbanken Abp's earnings per share have risen 16% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Ålandsbanken Abp has lifted its dividend by approximately 33% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Should investors buy Ålandsbanken Abp for the upcoming dividend? Earnings per share are growing nicely, and Ålandsbanken Abp is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Overall, Ålandsbanken Abp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Want to learn more about Ålandsbanken Abp's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.