We Wouldn't Be Too Quick To Buy Olav Thon Eiendomsselskap ASA (OB:OLT) Before It Goes Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Olav Thon Eiendomsselskap ASA (OB:OLT) is about to trade ex-dividend in the next three days. 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 Olav Thon Eiendomsselskap's shares before the 16th of May in order to receive the dividend, which the company will pay on the 29th of May.

The company's next dividend payment will be kr07.00 per share, and in the last 12 months, the company paid a total of kr7.00 per share. Based on the last year's worth of payments, Olav Thon Eiendomsselskap has a trailing yield of 3.1% on the current stock price of kr0228.00. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Olav Thon Eiendomsselskap

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. Olav Thon Eiendomsselskap reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Olav Thon Eiendomsselskap didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Thankfully its dividend payments took up just 33% of the free cash flow it generated, which is a comfortable payout ratio.

Click here to see how much of its profit Olav Thon Eiendomsselskap paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Olav Thon Eiendomsselskap reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Olav Thon Eiendomsselskap has lifted its dividend by approximately 17% a year on average.

We update our analysis on Olav Thon Eiendomsselskap every 24 hours, so you can always get the latest insights on its financial health, here.

Final Takeaway

From a dividend perspective, should investors buy or avoid Olav Thon Eiendomsselskap? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Olav Thon Eiendomsselskap.

So if you're still interested in Olav Thon Eiendomsselskap despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. For example - Olav Thon Eiendomsselskap has 1 warning sign 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.