Should You Buy Solid Försäkringsaktiebolag (publ) (STO:SFAB) For Its Upcoming Dividend?

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Solid Försäkringsaktiebolag (publ) (STO:SFAB) is about to go ex-dividend in just 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Solid Försäkringsaktiebolag's shares on or after the 26th of April, you won't be eligible to receive the dividend, when it is paid on the 3rd of May.

The company's next dividend payment will be kr04.50 per share, on the back of last year when the company paid a total of kr4.50 to shareholders. Based on the last year's worth of payments, Solid Försäkringsaktiebolag stock has a trailing yield of around 6.1% on the current share price of kr074.20. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Solid Försäkringsaktiebolag

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. Solid Försäkringsaktiebolag is paying out an acceptable 52% of its profit, a common payout level among most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Solid Försäkringsaktiebolag paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Solid Försäkringsaktiebolag has grown its earnings rapidly, up 65% a year for the past five years.

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

To Sum It Up

Should investors buy Solid Försäkringsaktiebolag for the upcoming dividend? Earnings per share are growing nicely, and Solid Försäkringsaktiebolag is paying out a percentage of its earnings that is around the average for dividend-paying stocks. Solid Försäkringsaktiebolag ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. To help with this, we've discovered 1 warning sign for Solid Försäkringsaktiebolag that you should be aware of before investing in their shares.

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.