Here's What We Like About Fasadgruppen Group's (STO:FG) Upcoming Dividend

By
Simply Wall St
Published
May 09, 2022
OM:FG
Source: Shutterstock

It looks like Fasadgruppen Group AB (publ) (STO:FG) is about to go 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Fasadgruppen Group's shares before the 13th of May in order to receive the dividend, which the company will pay on the 19th of May.

The company's next dividend payment will be kr1.20 per share, on the back of last year when the company paid a total of kr1.20 to shareholders. Last year's total dividend payments show that Fasadgruppen Group has a trailing yield of 0.8% on the current share price of SEK141.8. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Fasadgruppen Group can afford its dividend, and if the dividend could grow.

See our latest analysis for Fasadgruppen Group

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Fasadgruppen Group's payout ratio is modest, at just 29% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The good news is it paid out just 18% of its free cash flow in the last year.

It's positive to see that Fasadgruppen Group'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.

historic-dividend
OM:FG Historic Dividend May 9th 2022

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Fasadgruppen Group's earnings per share have risen 10% per annum over the last three years. Earnings per share are growing rapidly and the company is keeping more than half of its earnings within the business; an attractive combination which could suggest the company is focused on reinvesting to grow earnings further. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Unfortunately Fasadgruppen Group has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is Fasadgruppen Group an attractive dividend stock, or better left on the shelf? We love that Fasadgruppen Group is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. Fasadgruppen Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Fasadgruppen Group is facing. Every company has risks, and we've spotted 3 warning signs for Fasadgruppen Group (of which 1 is potentially serious!) you should know about.

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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