Some investors rely on dividends to increase their wealth, and if you are one of those dividend researchers, you may be interested to know that Link Prop Investment AB (publ) (STO: LINKAB) is about to issue a dividend in just 3 days. The ex-dividend date is usually set to be one business day before the registration date which is the cut-off date on which you must be present in the company books as a shareholder in order to receive the dividend. The ex-dividend date is important as the settlement process involves two full business days. So if you miss this date, it will not appear in the company books on the documentation date. Thus, the shares of Link Prop Investment can be purchased before January 7 in order to receive the dividend that the company will pay on January 13.
The company’s next dividend payment will be NIS 2.00 per share. Last year, in total, the company distributed NIS 8.00 to shareholders. Looking at the last 12 months of the distributions, Link Prop Investment has a trailing return of about 5.1% on its current share price which stands at 156 SEK. If you are buying this business for its dividend, you should have an idea if the Link Prop Investment dividend is reliable and sustainable. We need to see if the dividend is covered by profits and if it increases.
Check out our latest analysis for Link Prop Investment
Dividends are usually paid from company profits. If a company pays more dividends than it earned in profit, then the dividend may be unsustainable. It paid 84% of its profits as dividends last year, which is not unreasonable, but limits the reinvestment in the business and leaves the dividend exposed to a business slump. We were concerned about the risk of declining profits. A useful secondary test could be to assess whether Link Prop Investment has generated enough free cash flow to meet its dividend. It distributed 48% of its free cash flow as dividends, a convenient level of payment for most companies.
It is positive to see that the Link Prop Investment dividend is covered by both profits and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually indicates a larger margin of confidence before the dividend is cut.
Click here to see how much of its profit Link Prop Investment has paid over the last 12 months.
Have profits and dividends increased?
Shares in companies that generate sustainable growth in profits often provide the best dividend chances, as it is easier to raise the dividend when profits rise. If the business goes into recession and the dividend cuts, the company may see its value fall rapidly. Fortunately for readers, Link Prop Investment’s earnings per share have grown by 17% a year over the past five years. The company has paid most of its earnings as dividends in the past year, although business is booming and earnings per share are growing rapidly. We are surprised that management has not chosen to reinvest more in the business to accelerate growth even further.
The main way most investors will appreciate a company’s dividend prospects is by examining the historical rate of dividend growth. Link Prop Investment has provided a dividend growth of 12% per year on average over the past six years. It’s great to see the earnings per share grow rapidly over several years, and the dividends per share grow right along with it.
From a dividend standpoint, should investors buy or refrain from investing in Link Prop? Increasing earnings per share and the conservative payment ratios of Link Prop Investment create a decent combination. We also like that it paid a lower percentage of its cash flow. There is a lot to love about Link Prop Investment, and we would rather check it out.
With that in mind, a critical part of thorough stock research is to be aware of all the risks the stock now faces. For example, we identified 5 warning signs for Link Prop Investment (Should not ignore 1) You should be aware.
A common mistake in investing is to buy the first interesting stock you see. Here you will find a list of promising dividend stocks with a return of more than 2% and a close dividend.
Do you have any feedback on this article? Afraid of the content? Be in touch With us directly. Alternatively, email the editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide interpretation based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended for financial advice. It does not constitute a recommendation to buy or sell any stock, nor does it take into account your goals, or your financial situation. We strive to bring you focused long-term analysis driven by basic data. Please note that our analysis may not take into account the latest postings of the company that are sensitive to price or quality material. Simply Wall St has no position in any of the stocks mentioned.