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

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Bokusgruppen AB (publ) (STO:BOKUS) is about to trade ex-dividend in the next 3 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Bokusgruppen's shares before the 8th of May in order to be eligible for the dividend, which will be paid on the 14th of May.

The company's next dividend payment will be kr01.80 per share, and in the last 12 months, the company paid a total of kr3.60 per share. Based on the last year's worth of payments, Bokusgruppen stock has a trailing yield of around 6.9% on the current share price of kr052.40. If you buy this business for its dividend, you should have an idea of whether Bokusgruppen's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

We've discovered 2 warning signs about Bokusgruppen. View them for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Bokusgruppen distributed an unsustainably high 140% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious. A useful secondary check can be to evaluate whether Bokusgruppen generated enough free cash flow to afford its dividend. It paid out 24% of its free cash flow as dividends last year, which is conservatively low.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Bokusgruppen fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Very few companies are able to sustainably pay dividends larger than their reported earnings.

Check out our latest analysis for Bokusgruppen

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

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Bokusgruppen has grown its earnings rapidly, up 52% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Bokusgruppen has delivered 6.3% dividend growth per year on average over the past three years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Is Bokusgruppen an attractive dividend stock, or better left on the shelf? It's good to see earnings per share growing and low cashflow payout ratio, although we're uncomfortable with Bokusgruppen's paying out such a high percentage of its profit. To summarise, Bokusgruppen looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Bokusgruppen is facing. Every company has risks, and we've spotted 2 warning signs for Bokusgruppen you should know about.

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.