Why You Might Be Interested In Clas Ohlson AB (publ) (STO:CLAS B) For Its Upcoming Dividend

It looks like Clas Ohlson AB (publ) (STO:CLAS B) is about to go ex-dividend in the next 4 days. The ex-dividend date occurs one day 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. Therefore, if you purchase Clas Ohlson's shares on or after the 9th of September, you won't be eligible to receive the dividend, when it is paid on the 13th of September.

The company's next dividend payment will be kr02.13 per share. Last year, in total, the company distributed kr4.25 to shareholders. Based on the last year's worth of payments, Clas Ohlson stock has a trailing yield of around 2.7% on the current share price of kr0159.50. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Clas Ohlson

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. Clas Ohlson paid out 53% of its earnings to investors last year, a normal payout level for most businesses. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 6.9% of its cash flow last year.

It's positive to see that Clas Ohlson's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see Clas Ohlson has grown its earnings rapidly, up 48% a year for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Clas Ohlson could have strong prospects for future increases to the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Clas Ohlson dividends are largely the same as they were 10 years ago.

Final Takeaway

Has Clas Ohlson got what it takes to maintain its dividend payments? Clas Ohlson's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. There's a lot to like about Clas Ohlson, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Clas Ohlson is facing. Our analysis shows 3 warning signs for Clas Ohlson and you should be aware of these before buying any shares.

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