Is It Smart To Buy Sjóvá-Almennar tryggingar hf. (ICE:SJOVA) Before It Goes Ex-Dividend?

Sjóvá-Almennar tryggingar hf. (ICE:SJOVA) stock is about to trade ex-dividend in four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Sjóvá-Almennar tryggingar hf's shares before the 8th of March in order to receive the dividend, which the company will pay on the 21st of March.

The company's next dividend payment will be Kr02.12 per share. Last year, in total, the company distributed Kr2.12 to shareholders. Calculating the last year's worth of payments shows that Sjóvá-Almennar tryggingar hf has a trailing yield of 4.9% on the current share price of Kr043.70. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Sjóvá-Almennar tryggingar hf

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Sjóvá-Almennar tryggingar hf paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies.

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 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Sjóvá-Almennar tryggingar hf has grown its earnings rapidly, up 54% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Sjóvá-Almennar tryggingar hf's dividend payments per share have declined at 1.9% per year on average over the past nine years, which is uninspiring.

To Sum It Up

Is Sjóvá-Almennar tryggingar hf an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and Sjóvá-Almennar tryggingar hf is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Sjóvá-Almennar tryggingar hf appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks Sjóvá-Almennar tryggingar hf is facing. In terms of investment risks, we've identified 1 warning sign with Sjóvá-Almennar tryggingar hf and understanding them should be part of your investment process.

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