Only Four Days Left To Cash In On Nidaros Sparebank's (OB:NISB) Dividend

Nidaros Sparebank (OB:NISB) is about to trade ex-dividend in the next 4 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 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. Thus, you can purchase Nidaros Sparebank's shares before the 22nd of March in order to receive the dividend, which the company will pay on the 5th of April.

The company's next dividend payment will be kr05.67 per share, on the back of last year when the company paid a total of kr5.67 to shareholders. Based on the last year's worth of payments, Nidaros Sparebank stock has a trailing yield of around 5.1% on the current share price of kr0111.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Nidaros Sparebank can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Nidaros Sparebank

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Nidaros Sparebank paid out 150% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

Click here to see how much of its profit Nidaros Sparebank paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For that reason, it's encouraging to see Nidaros Sparebank's earnings over the past year have risen 68%. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Nidaros Sparebank has delivered an average of 0.7% per year annual increase in its dividend, based on the past four years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Nidaros Sparebank is keeping back more of its profits to grow the business.

Final Takeaway

Is Nidaros Sparebank an attractive dividend stock, or better left on the shelf? We're not enthused to see Nidaros Sparebank's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. It doesn't appear an outstanding opportunity, but could be worth a closer look.

However if you're still interested in Nidaros Sparebank as a potential investment, you should definitely consider some of the risks involved with Nidaros Sparebank. Our analysis shows 2 warning signs for Nidaros Sparebank and you should be aware of these before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.