Shares of Sparebanken Møre (OB:MORG) will begin trading ex-dividend in 2 days. To qualify for the dividend check of øre15.50 per share, investors must have owned the shares prior to 21 March 2019, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Should you diversify into Sparebanken Møre and boost your portfolio income stream? Well, keep on reading because today, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
5 checks you should use to assess a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Sparebanken Møre fit our criteria?
The current trailing twelve-month payout ratio for the stock is 52%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 52% which, assuming the share price stays the same, leads to a dividend yield of 5.4%. In addition to this, EPS should increase to NOK31.18.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Dividend payments from Sparebanken Møre have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, Sparebanken Møre generates a yield of 5.2%, which is high for Banks stocks but still below the market’s top dividend payers.
If Sparebanken Møre is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three pertinent aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for MORG’s future growth? Take a look at our free research report of analyst consensus for MORG’s outlook.
- Valuation: What is MORG worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MORG is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.