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Shares of New Wave Group AB (publ) (STO:NEWA B) will begin trading ex-dividend in 2 days. To qualify for the dividend check of kr2.00 per share, investors must have owned the shares prior to 20 May 2019, which is the last day the company's management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding New Wave Group can impact your portfolio income stream, by analysing the stock's most recent financial data and dividend attributes.
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Check out our latest analysis for New Wave Group
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has it increased its dividend per share amount over the past?
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Is is able to pay the current rate of dividends from its earnings?
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Will it be able to continue to payout at the current rate in the future?
Does New Wave Group pass our checks?
The current trailing twelve-month payout ratio for the stock is 35%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 40% which, assuming the share price stays the same, leads to a dividend yield of 3.7%. Moreover, EPS should increase to SEK6.72. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
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. NEWA B has increased its DPS from SEK0.18 to SEK2 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. This is an impressive feat, which makes NEWA B a true dividend rockstar.
In terms of its peers, New Wave Group generates a yield of 2.9%, which is high for Luxury stocks but still below the market's top dividend payers.
Next Steps:
With these dividend metrics in mind, I definitely rank New Wave Group as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. There are three pertinent factors you should look at: