Just One Day Till Bokusgruppen AB (publ) (STO:BOKUS) Will Be Trading Ex-Dividend

Readers hoping to buy Bokusgruppen AB (publ) (STO:BOKUS) 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. Therefore, if you purchase Bokusgruppen's shares on or after the 9th of November, you won't be eligible to receive the dividend, when it is paid on the 15th of November.

The company's next dividend payment will be kr1.50 per share, on the back of last year when the company paid a total of kr3.00 to shareholders. Looking at the last 12 months of distributions, Bokusgruppen has a trailing yield of approximately 9.7% on its current stock price of SEK30.8. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Bokusgruppen

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year, Bokusgruppen paid out 385% of its profit to shareholders in the form of dividends. This is not sustainable behaviour and requires a closer look on behalf of the purchaser. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.

It's good to see that while Bokusgruppen's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. 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 Bokusgruppen 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. For this reason, we're glad to see Bokusgruppen's earnings per share have risen 20% per annum over the last three years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the Bokusgruppen dividends are largely the same as they were two years ago.

To Sum It Up

Is Bokusgruppen an attractive dividend stock, or better left on the shelf? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Bokusgruppen is paying out so much of its profit. All things considered, we are not particularly enthused about Bokusgruppen from a dividend perspective.

While it's tempting to invest in Bokusgruppen for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 3 warning signs for Bokusgruppen you should be aware of.

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.