Important news for shareholders and potential investors in Besqab AB (publ) (STO:BESQ): The dividend payment of kr2.50 per share will be distributed to shareholders on 09 May 2019, and the stock will begin trading ex-dividend at an earlier date, 03 May 2019. Is this future income a persuasive enough catalyst for investors to think about Besqab as an investment today? Below, I'm going to look at the latest data and analyze the stock and its dividend property in further detail.
View our latest analysis for Besqab
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is it the top 25% annual dividend yield payer?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has dividend per share risen in the past couple of years?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
How well does Besqab fit our criteria?
Besqab has a trailing twelve-month payout ratio of 32%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. Unfortunately, it is really too early to view Besqab as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
Compared to its peers, Besqab generates a yield of 2.9%, which is on the low-side for Consumer Durables stocks.
Next Steps:
After digging a little deeper into Besqab's yield, it's easy to see why you should be cautious investing in the company just for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I've compiled three fundamental factors you should further examine: