Why You Might Be Interested In SpareBank 1 Østfold Akershus (OB:SOAG) For Its Upcoming Dividend

It looks like SpareBank 1 Østfold Akershus (OB:SOAG) is about to go ex-dividend in the next three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Therefore, if you purchase SpareBank 1 Østfold Akershus' shares on or after the 3rd of December, you won't be eligible to receive the dividend, when it is paid on the 10th of December.

The company's upcoming dividend is kr010.00 a share, following on from the last 12 months, when the company distributed a total of kr20.10 per share to shareholders. Based on the last year's worth of payments, SpareBank 1 Østfold Akershus stock has a trailing yield of around 4.3% on the current share price of kr0462.95. 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 SpareBank 1 Østfold Akershus can afford its dividend, and if the dividend could grow.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately SpareBank 1 Østfold Akershus's payout ratio is modest, at just 42% of profit.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Check out our latest analysis for SpareBank 1 Østfold Akershus

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see SpareBank 1 Østfold Akershus's earnings per share have risen 11% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, SpareBank 1 Østfold Akershus has lifted its dividend by approximately 16% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Is SpareBank 1 Østfold Akershus worth buying for its dividend? 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. We think this is a pretty attractive combination, and would be interested in investigating SpareBank 1 Østfold Akershus more closely.

So while SpareBank 1 Østfold Akershus looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, SpareBank 1 Østfold Akershus has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

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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.