Is It Smart To Buy Sparebanken Vest (OB:SVEG) Before It Goes Ex-Dividend?

Readers hoping to buy Sparebanken Vest (OB:SVEG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Sparebanken Vest's shares before the 22nd of March in order to receive the dividend, which the company will pay on the 4th of April.

The company's next dividend payment will be kr07.50 per share, and in the last 12 months, the company paid a total of kr7.50 per share. Calculating the last year's worth of payments shows that Sparebanken Vest has a trailing yield of 6.1% on the current share price of kr0122.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Sparebanken Vest has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Sparebanken Vest

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Sparebanken Vest paid out 59% of its earnings to investors last year, a normal payout level for most businesses.

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 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. 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 Sparebanken Vest's earnings per share have risen 16% 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. In the past 10 years, Sparebanken Vest has increased its dividend at approximately 12% 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

Should investors buy Sparebanken Vest for the upcoming dividend? Earnings per share are growing at an attractive rate, and Sparebanken Vest is paying out a bit over half its profits. We think this is a pretty attractive combination, and would be interested in investigating Sparebanken Vest more closely.

On that note, you'll want to research what risks Sparebanken Vest is facing. In terms of investment risks, we've identified 2 warning signs with Sparebanken Vest and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.