Here's What We Like About Aasen Sparebank's (OB:AASB) Upcoming Dividend

It looks like Aasen Sparebank (OB:AASB) is about to go ex-dividend in the next 4 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Aasen Sparebank's shares before the 22nd of March in order to be eligible for the dividend, which will be paid on the 4th of April.

The company's upcoming dividend is kr09.00 a share, following on from the last 12 months, when the company distributed a total of kr9.00 per share to shareholders. Calculating the last year's worth of payments shows that Aasen Sparebank has a trailing yield of 6.8% on the current share price of kr0132.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Aasen Sparebank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Aasen Sparebank paid out a comfortable 28% of its profit last year.

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 Aasen Sparebank 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. This is why it's a relief to see Aasen Sparebank earnings per share are up 4.8% per annum over the last five years.

We'd also point out that Aasen Sparebank issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Aasen Sparebank has delivered 1.5% dividend growth per year on average over the past eight years.

The Bottom Line

Is Aasen Sparebank worth buying for its dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Aasen Sparebank appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Aasen Sparebank has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for Aasen Sparebank that you should be aware of before investing in their shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.