It Might Not Be A Great Idea To Buy Cibus Nordic Real Estate AB (publ) (STO:CIBUS) For Its Next Dividend

Readers hoping to buy Cibus Nordic Real Estate AB (publ) (STO:CIBUS) 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Cibus Nordic Real Estate's shares before the 25th of November to receive the dividend, which will be paid on the 3rd of December.

The company's next dividend payment will be €0.08 per share, on the back of last year when the company paid a total of €0.90 to shareholders. Based on the last year's worth of payments, Cibus Nordic Real Estate has a trailing yield of 6.2% on the current stock price of kr0168.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Cibus Nordic Real Estate

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 paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. 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 (52%) of its free cash flow in the past year, which is within an average range for most companies.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last six years, Cibus Nordic Real Estate has lifted its dividend by approximately 2.0% a year on average.

We update our analysis on Cibus Nordic Real Estate every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

Has Cibus Nordic Real Estate got what it takes to maintain its dividend payments? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." Bottom line: Cibus Nordic Real Estate has some unfortunate characteristics that we think could lead to sub-optimal outcomes for dividend investors.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Cibus Nordic Real Estate. Be aware that Cibus Nordic Real Estate is showing 3 warning signs in our investment analysis, and 1 of those is potentially serious...

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.