Be Sure To Check Out Sunndal Sparebank (OB:SUNSB) Before It Goes Ex-Dividend

Sunndal Sparebank (OB:SUNSB) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Sunndal Sparebank's shares before the 22nd of March to receive the dividend, which will be paid on the 9th of April.

The company's next dividend payment will be kr07.50 per share, on the back of last year when the company paid a total of kr7.50 to shareholders. Last year's total dividend payments show that Sunndal Sparebank has a trailing yield of 6.5% on the current share price of kr0116.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Sunndal 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. Its dividend payout ratio is 84% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. It could become a concern if earnings started to decline.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Sunndal Sparebank has grown its earnings rapidly, up 26% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Sunndal Sparebank's dividend payments are effectively flat on where they were five years ago.

To Sum It Up

Is Sunndal Sparebank an attractive dividend stock, or better left on the shelf? Earnings per share are growing nicely, and Sunndal Sparebank is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Sunndal Sparebank more closely.

So while Sunndal Sparebank looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Sunndal Sparebank has 3 warning signs we think you should be aware of.

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.