Don't Race Out To Buy Cibus Nordic Real Estate AB (publ) (STO:CIBUS) Just Because It's Going Ex-Dividend

Cibus Nordic Real Estate AB (publ) (STO:CIBUS) is about to trade ex-dividend in the next two days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Cibus Nordic Real Estate's shares before the 16th of April in order to be eligible for the dividend, which will be paid on the 28th of April.

The company's next dividend payment will be €0.07 per share. Last year, in total, the company distributed €0.90 to shareholders. Based on the last year's worth of payments, Cibus Nordic Real Estate has a trailing yield of 6.5% on the current stock price of kr0153.25. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Cibus Nordic Real Estate has been able to grow its dividends, or if the dividend might be cut.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Cibus Nordic Real Estate's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If Cibus Nordic Real Estate didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. It paid out more than half (54%) of its free cash flow in the past year, which is within an average range for most companies.

See our latest analysis for Cibus Nordic Real Estate

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Cibus Nordic Real Estate was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

We'd also point out that Cibus Nordic Real Estate issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Cibus Nordic Real Estate has delivered an average of 1.7% per year annual increase in its dividend, based on the past seven years of dividend payments.

Get our latest analysis on Cibus Nordic Real Estate's balance sheet health here.

To Sum It Up

Is Cibus Nordic Real Estate an attractive dividend stock, or better left on the shelf? It's hard to get used to Cibus Nordic Real Estate paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. It's not that we think Cibus Nordic Real Estate is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

With that in mind though, if the poor dividend characteristics of Cibus Nordic Real Estate don't faze you, it's worth being mindful of the risks involved with this business. Every company has risks, and we've spotted 3 warning signs for Cibus Nordic Real Estate (of which 2 are concerning!) you should know about.

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.