Read This Before Considering Platzer Fastigheter Holding AB (publ) (STO:PLAZ B) For Its Upcoming kr1.15 Dividend

It looks like Platzer Fastigheter Holding AB (publ) (STO:PLAZ B) is about to go ex-dividend in the next 4 days. 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. Therefore, if you purchase Platzer Fastigheter Holding's shares on or after the 22nd of September, you won't be eligible to receive the dividend, when it is paid on the 28th of September.

The company's next dividend payment will be kr1.15 per share, on the back of last year when the company paid a total of kr2.30 to shareholders. Calculating the last year's worth of payments shows that Platzer Fastigheter Holding has a trailing yield of 3.2% on the current share price of SEK72.3. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Platzer Fastigheter Holding

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Platzer Fastigheter Holding 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. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If Platzer Fastigheter Holding 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 distributed 40% of its free cash flow as dividends, a comfortable payout level for most companies.

Click here to see how much of its profit Platzer Fastigheter Holding 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. If earnings fall far enough, the company could be forced to cut its dividend. Platzer Fastigheter Holding was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past nine years, Platzer Fastigheter Holding has increased its dividend at approximately 16% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

We update our analysis on Platzer Fastigheter Holding every 24 hours, so you can always get the latest insights on its financial health, here.

To Sum It Up

Is Platzer Fastigheter Holding worth buying for its dividend? It's hard to get used to Platzer Fastigheter Holding paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

While it's tempting to invest in Platzer Fastigheter Holding for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for Platzer Fastigheter Holding that we strongly recommend you have a look at before investing in the company.

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.