Here's What We Like About Reitir fasteignafélag hf's (ICE:REITIR) Upcoming Dividend

Reitir fasteignafélag hf. (ICE:REITIR) stock is about to trade ex-dividend in 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. 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 Reitir fasteignafélag hf's shares before the 7th of March in order to receive the dividend, which the company will pay on the 27th of March.

The company's next dividend payment will be Kr02.05 per share. Last year, in total, the company distributed Kr2.05 to shareholders. Calculating the last year's worth of payments shows that Reitir fasteignafélag hf has a trailing yield of 2.5% on the current share price of Kr082.50. 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! As a result, readers should always check whether Reitir fasteignafélag hf has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Reitir fasteignafélag 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. Reitir fasteignafélag hf has a low and conservative payout ratio of just 20% of its income after tax. A useful secondary check can be to evaluate whether Reitir fasteignafélag hf generated enough free cash flow to afford its dividend. Luckily it paid out just 20% of its free cash flow 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 how much of its profit Reitir fasteignafélag hf 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Reitir fasteignafélag hf's earnings have been skyrocketing, up 131% per annum for the past five years. Reitir fasteignafélag hf looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Reitir fasteignafélag hf has delivered 4.9% dividend growth per year on average over the past eight years. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Should investors buy Reitir fasteignafélag hf for the upcoming dividend? It's great that Reitir fasteignafélag hf is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. It's a promising combination that should mark this company worthy of closer attention.

In light of that, while Reitir fasteignafélag hf has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 3 warning signs for Reitir fasteignafélag hf (1 can't be ignored!) that you ought to be aware of before buying the shares.

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.