ProfilGruppen AB (publ) (STO:PROF B) Looks Interesting, And It's About To Pay A Dividend

ProfilGruppen AB (publ) (STO:PROF B) is about to trade ex-dividend in the next 3 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. In other words, investors can purchase ProfilGruppen's shares before the 24th of April in order to be eligible for the dividend, which will be paid on the 30th of April.

The company's next dividend payment will be kr05.00 per share. Last year, in total, the company distributed kr5.00 to shareholders. Looking at the last 12 months of distributions, ProfilGruppen has a trailing yield of approximately 3.8% on its current stock price of kr0133.00. If you buy this business for its dividend, you should have an idea of whether ProfilGruppen's dividend is reliable and sustainable. So we need to investigate whether ProfilGruppen can afford its dividend, and if the dividend could grow.

Check out our latest analysis for ProfilGruppen

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. ProfilGruppen paid out a comfortable 41% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. The good news is it paid out just 8.4% of its free cash flow in the last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

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. 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 ProfilGruppen earnings per share are up 2.4% per annum over the last five years. Recent growth has not been impressive. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. ProfilGruppen has delivered an average of 7.6% per year annual increase in its dividend, based on the past seven years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Has ProfilGruppen got what it takes to maintain its dividend payments? Earnings per share have been growing moderately, and ProfilGruppen is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and ProfilGruppen is halfway there. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in ProfilGruppen for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for ProfilGruppen and you should be aware of these before buying any shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.