Here's What We Like About Sjóvá-Almennar tryggingar hf's (ICE:SJOVA) Upcoming Dividend

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 Sjóvá-Almennar tryggingar hf. (ICE:SJOVA) is about to go ex-dividend in just 3 days. Ex-dividend means that investors that purchase the stock on or after the 15th of March will not receive this dividend, which will be paid on the 30th of March.

Sjóvá-Almennar tryggingar hf's upcoming dividend is Kr1.99 a share, following on from the last 12 months, when the company distributed a total of Kr1.99 per share to shareholders. Calculating the last year's worth of payments shows that Sjóvá-Almennar tryggingar hf has a trailing yield of 6.3% on the current share price of ISK31.5. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Sjóvá-Almennar tryggingar hf

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. Sjóvá-Almennar tryggingar hf paid out more than half (50%) of its earnings last year, which is a regular payout ratio for most companies.

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 how much of its profit Sjóvá-Almennar tryggingar hf 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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see Sjóvá-Almennar tryggingar hf has grown its earnings rapidly, up 57% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Sjóvá-Almennar tryggingar hf's dividend payments per share have declined at 3.8% per year on average over the past six years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

To Sum It Up

Should investors buy Sjóvá-Almennar tryggingar hf for the upcoming dividend? Sjóvá-Almennar tryggingar hf has an acceptable payout ratio and its earnings per share have been improving at a decent rate. We think this is a pretty attractive combination, and would be interested in investigating Sjóvá-Almennar tryggingar hf more closely.

So while Sjóvá-Almennar tryggingar hf 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 Sjóvá-Almennar tryggingar hf that we strongly recommend you have a look at before investing in the company.

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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