Coor Service Management Holding AB (STO:COOR) Pays A kr02.40 Dividend In Just Four Days

Coor Service Management Holding AB (STO:COOR) stock is about to trade ex-dividend in 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. Therefore, if you purchase Coor Service Management Holding's shares on or after the 29th of April, you won't be eligible to receive the dividend, when it is paid on the 6th of May.

The company's upcoming dividend is kr02.40 a share, following on from the last 12 months, when the company distributed a total of kr3.00 per share to shareholders. Last year's total dividend payments show that Coor Service Management Holding has a trailing yield of 6.1% on the current share price of kr048.90. 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! So we need to investigate whether Coor Service Management Holding can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Coor Service Management Holding

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. Coor Service Management Holding distributed an unsustainably high 147% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious. 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. It distributed 50% of its free cash flow as dividends, a comfortable payout level for most companies.

It's good to see that while Coor Service Management Holding's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Coor Service Management Holding earnings per share are up 8.5% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last eight years, Coor Service Management Holding has lifted its dividend by approximately 10.0% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Has Coor Service Management Holding got what it takes to maintain its dividend payments? Earnings per share have grown modestly, and last year Coor Service Management Holding paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

With that being said, if dividends aren't your biggest concern with Coor Service Management Holding, you should know about the other risks facing this business. For example - Coor Service Management Holding has 4 warning signs 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.