Is It Smart To Buy Høland og Setskog Sparebank (OB:HSPG) Before It Goes Ex-Dividend?

Readers hoping to buy Høland og Setskog Sparebank (OB:HSPG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 5th of March will not receive the dividend, which will be paid on the 19th of March.

Høland og Setskog Sparebank's upcoming dividend is kr5.00 a share, following on from the last 12 months, when the company distributed a total of kr8.00 per share to shareholders. Based on the last year's worth of payments, Høland og Setskog Sparebank has a trailing yield of 5.9% on the current stock price of NOK136. 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 Høland og Setskog Sparebank can afford its dividend, and if the dividend could grow.

View our latest analysis for Høland og Setskog Sparebank

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Høland og Setskog Sparebank paying out a modest 46% of its earnings.

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 Høland og Setskog 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Høland og Setskog Sparebank's earnings per share have risen 10% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Høland og Setskog Sparebank dividends are largely the same as they were 10 years ago.

To Sum It Up

Has Høland og Setskog Sparebank got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Høland og Setskog Sparebank ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

In light of that, while Høland og Setskog Sparebank has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Høland og Setskog Sparebank has 2 warning signs we think you should be aware of.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting 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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