Is It Worth Considering Bergman & Beving AB (publ) (STO:BERG B) For Its Upcoming Dividend?

Bergman & Beving AB (publ) (STO:BERG B) stock is about to trade ex-dividend in 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. 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. Meaning, you will need to purchase Bergman & Beving's shares before the 30th of August to receive the dividend, which will be paid on the 5th of September.

The company's next dividend payment will be kr03.80 per share, and in the last 12 months, the company paid a total of kr3.80 per share. Looking at the last 12 months of distributions, Bergman & Beving has a trailing yield of approximately 1.2% on its current stock price of kr0307.00. 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! As a result, readers should always check whether Bergman & Beving has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Bergman & Beving

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. Bergman & Beving is paying out an acceptable 51% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Bergman & Beving generated enough free cash flow to afford its dividend. Luckily it paid out just 15% of its free cash flow 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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at Bergman & Beving, with earnings per share up 3.4% on average over the last five years. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Bergman & Beving has lifted its dividend by approximately 0.8% a year on average.

To Sum It Up

From a dividend perspective, should investors buy or avoid Bergman & Beving? Earnings per share growth has been modest and Bergman & Beving paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. In summary, it's hard to get excited about Bergman & Beving from a dividend perspective.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Our analysis shows 2 warning signs for Bergman & Beving and you should be aware of these before buying any shares.

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.