Should You Buy AGES Industri AB (publ) (STO:AGES B) For Its Upcoming Dividend?

It looks like AGES Industri AB (publ) (STO:AGES B) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. This means that investors who purchase AGES Industri's shares on or after the 8th of May will not receive the dividend, which will be paid on the 15th of May.

The company's next dividend payment will be kr01.50 per share, on the back of last year when the company paid a total of kr1.50 to shareholders. Based on the last year's worth of payments, AGES Industri has a trailing yield of 1.9% on the current stock price of kr079.00. 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 AGES Industri has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for AGES Industri

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. AGES Industri is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at AGES Industri, with earnings per share up 9.5% on average over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. AGES Industri's dividend payments per share have declined at 10% per year on average over the past nine years, which is uninspiring. AGES Industri is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Is AGES Industri worth buying for its dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, AGES Industri appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

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

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.