ITAB Shop Concept AB (publ) (STO:ITAB) Will Pay A kr0.50 Dividend In Four Days

Readers hoping to buy ITAB Shop Concept AB (publ) (STO:ITAB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Therefore, if you purchase ITAB Shop Concept's shares on or after the 11th of May, you won't be eligible to receive the dividend, when it is paid on the 17th of May.

The company's next dividend payment will be kr0.50 per share. Last year, in total, the company distributed kr0.50 to shareholders. Calculating the last year's worth of payments shows that ITAB Shop Concept has a trailing yield of 4.2% on the current share price of SEK11.9. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for ITAB Shop Concept

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately ITAB Shop Concept's payout ratio is modest, at just 49% of profit.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. ITAB Shop Concept's earnings per share have fallen at approximately 20% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. ITAB Shop Concept has delivered an average of 1.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.

The Bottom Line

Is ITAB Shop Concept an attractive dividend stock, or better left on the shelf? ITAB Shop Concept's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. In summary, ITAB Shop Concept appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while ITAB Shop Concept looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 1 warning sign for ITAB Shop Concept 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.