Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Genova Property Group AB (publ) (STO:GPG) is about to trade ex-dividend in the next 2 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase Genova Property Group's shares on or after the 6th of November will not receive the dividend, which will be paid on the 12th of November.
The company's next dividend payment will be kr00.23 per share, and in the last 12 months, the company paid a total of kr0.92 per share. Based on the last year's worth of payments, Genova Property Group stock has a trailing yield of around 3.1% on the current share price of kr029.60. 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.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Genova Property Group is paying out just 13% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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 44% of its free cash flow in the past year.
It's positive to see that Genova Property Group'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.
See our latest analysis for Genova Property Group
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see Genova Property Group's earnings per share have dropped 8.1% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, two years ago, Genova Property Group has lifted its dividend by approximately 2.2% a year on average.
The Bottom Line
Has Genova Property Group got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, it's hard to get excited about Genova Property Group from a dividend perspective.
So while Genova Property Group looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, Genova Property Group has 3 warning signs (and 2 which are a bit concerning) we think you should know about.
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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