Grong Sparebank (OB:GRONG) Looks Interesting, And It's About To Pay A Dividend

Grong Sparebank (OB:GRONG) is about to trade ex-dividend in the next 3 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Grong Sparebank investors that purchase the stock on or after the 4th of April will not receive the dividend, which will be paid on the 12th of April.

The company's next dividend payment will be kr010.00 per share, and in the last 12 months, the company paid a total of kr10.00 per share. Last year's total dividend payments show that Grong Sparebank has a trailing yield of 6.7% on the current share price of kr0150.00. 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 investigate whether Grong Sparebank can afford its dividend, and if the dividend could grow.

View our latest analysis for Grong Sparebank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Grong Sparebank paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.

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 Grong Sparebank 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Grong Sparebank's earnings per share have risen 13% per annum over the last five years.

We'd also point out that Grong Sparebank issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last six years, Grong Sparebank has lifted its dividend by approximately 6.1% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is Grong Sparebank an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and Grong Sparebank is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Grong 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 Grong Sparebank has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for Grong Sparebank and you should be aware of them before buying any 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.