RVRC Holding AB (publ) (STO:RVRC) Passed Our Checks, And It's About To Pay A kr01.35 Dividend

RVRC Holding AB (publ) (STO:RVRC) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase RVRC Holding's shares on or after the 21st of November will not receive the dividend, which will be paid on the 27th of November.

The company's next dividend payment will be kr01.35 per share, and in the last 12 months, the company paid a total of kr1.35 per share. Looking at the last 12 months of distributions, RVRC Holding has a trailing yield of approximately 2.1% on its current stock price of kr064.05. 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.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. RVRC Holding is paying out an acceptable 50% of its profit, a common payout level among most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 41% of its free cash flow in the past year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

See our latest analysis for RVRC Holding

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 RVRC Holding has grown its earnings rapidly, up 38% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, RVRC Holding could have strong prospects for future increases to the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, four years ago, RVRC Holding has lifted its dividend by approximately 21% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Should investors buy RVRC Holding for the upcoming dividend? We like RVRC Holding's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. RVRC Holding looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while RVRC Holding has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 1 warning sign for RVRC Holding 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.