Looks like OKEA ASA (OB:OKEA) is set to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day shareholders must be on the books of the company to receive a dividend. The ex-dividend date is important because any stock transaction must have settled before the record date to be eligible for a dividend. This means that investors who buy OKEA shares on or after September 2 will not receive the dividend, which will be paid on September 15.
The company’s next dividend payment will be 1.00 kr per share. If you’re buying this company for its dividend, you should have some idea of the reliability and sustainability of OKEA’s dividend. Therefore, readers should always check whether OKEA was able to increase its dividend or if the dividend could be reduced.
Discover our latest analysis for OKEA
If a company pays out more dividends than it has earned, the dividend may become unsustainable – a less than ideal situation. OKEA has a low and conservative payout ratio of just 15% of its after-tax income. That said, even very profitable companies can sometimes not generate enough cash to pay the dividend, so we should always check if the dividend is covered by cash flow. The good news is that it has only paid out 3.9% of its free cash flow over the past year.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This generally suggests that the dividend is sustainable, as long as earnings don’t drop precipitously.
Click here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have earnings and dividends increased?
Companies with consistently rising earnings per share tend to create the best dividend-paying stocks because they generally find it easier to increase dividends per share. Investors love dividends, so if earnings fall and the dividend is cut, expect a stock to sell heavily at the same time. That’s why it’s heartening to see that OKEA’s revenue has skyrocketed, growing 46% annually over the past five years. OKEA looks like a real growth company, with earnings per share growing at a breakneck pace and the company reinvesting most of its profits back into the business.
This is the first year that OKEA has paid a dividend, which is exciting for shareholders – but it means there is no dividend history to review.
Should investors buy OKEA for the next dividend? We like that OKEA is increasing its earnings per share while simultaneously paying out a small percentage of its earnings and cash flow. These characteristics suggest that the company is reinvesting in the growth of its business, while the conservative payout ratio also implies a reduced risk of dividend reduction in the future. Overall, we think this is an attractive combination worthy of further research.
With that in mind, an essential part of thorough stock research is being aware of all the risks that stocks currently face. In terms of investment risks, we have identified 2 warning signs with OKEA and understanding them should be part of your investment process.
As a general rule, we don’t recommend simply buying the first dividend-paying stock you see. Here is a curated list of attractive stocks that are strong dividend payers.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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