Bergman & Beving AB (publ) (STO:BERG B) Passed Our Checks, And It's About To Pay A kr3.60 Dividend

It looks like Bergman & Beving AB (publ) (STO:BERG B) is about to go ex-dividend in the next 4 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 as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase Bergman & Beving's shares on or after the 25th of August will not receive the dividend, which will be paid on the 31st of August.

The company's next dividend payment will be kr3.60 per share, and in the last 12 months, the company paid a total of kr3.60 per share. Last year's total dividend payments show that Bergman & Beving has a trailing yield of 2.4% on the current share price of SEK149.6. If you buy this business for its dividend, you should have an idea of whether Bergman & Beving's dividend is reliable and sustainable. So we need to investigate whether Bergman & Beving can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Bergman & Beving

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Bergman & Beving paid out a comfortable 48% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 24% of its free cash flow in the last year.

It's positive to see that Bergman & Beving's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Bergman & Beving, with earnings per share up 5.5% on average over the last five years. The company is retaining more than half of its earnings within the business, and it has been growing earnings at a decent rate. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Bergman & Beving has lifted its dividend by approximately 1.8% a year on average.

Final Takeaway

Is Bergman & Beving an attractive dividend stock, or better left on the shelf? Earnings per share growth has been growing somewhat, and Bergman & Beving is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Bergman & Beving is halfway there. It's a promising combination that should mark this company worthy of closer attention.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Every company has risks, and we've spotted 2 warning signs for Bergman & Beving you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.