Income Investors Should Know That Link Prop Investment AB (publ) (STO:LINKAB) Goes Ex-Dividend Soon

Readers hoping to buy Link Prop Investment AB (publ) (STO:LINKAB) 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 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. Accordingly, Link Prop Investment investors that purchase the stock on or after the 6th of January will not receive the dividend, which will be paid on the 10th of January.

The company's next dividend payment will be kr02.00 per share. Last year, in total, the company distributed kr8.00 to shareholders. Based on the last year's worth of payments, Link Prop Investment stock has a trailing yield of around 5.0% on the current share price of kr0161.00. If you buy this business for its dividend, you should have an idea of whether Link Prop Investment's dividend is reliable and sustainable. As a result, readers should always check whether Link Prop Investment has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Link Prop Investment

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. Link Prop Investment paid out 106% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. A useful secondary check can be to evaluate whether Link Prop Investment generated enough free cash flow to afford its dividend. Fortunately, it paid out only 36% of its free cash flow in the past year.

It's good to see that while Link Prop Investment's dividends were not covered by profits, at least they are affordable from a cash perspective. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.

Click here to see how much of its profit Link Prop Investment 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. This is why it's a relief to see Link Prop Investment earnings per share are up 2.9% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, nine years ago, Link Prop Investment has lifted its dividend by approximately 8.0% a year on average. 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.

Final Takeaway

Should investors buy Link Prop Investment for the upcoming dividend? Link Prop Investment has been steadily growing its earnings per share, and it is paying out just 36% of its cash flow but an uncomfortably high 106% of its income. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of Link Prop Investment's dividend merits.

If you're not too concerned about Link Prop Investment's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, Link Prop Investment has 4 warning signs (and 1 which can't be ignored) we think you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.