Income Investors Should Know That Heba Fastighets AB (publ) (STO:HEBA B) Goes Ex-Dividend Soon

It looks like Heba Fastighets AB (publ) (STO:HEBA B) is about to go ex-dividend in the next 3 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 important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company’s books on the record date. In other words, investors can purchase Heba Fastighets’ shares before the 24th of April in order to be eligible for the dividend, which will be paid on the 30th of April.

The company’s next dividend payment will be kr00.55 per share, and in the last 12 months, the company paid a total of kr0.55 per share. Last year’s total dividend payments show that Heba Fastighets has a trailing yield of 2.0% on the current share price of kr028.00. 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! So we need to investigate whether Heba Fastighets can afford its dividend, and if the dividend could grow.

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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. Heba Fastighets paid out a comfortable 31% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 41% of the free cash flow it generated, which is a comfortable payout ratio.

It’s positive to see that Heba Fastighets’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 Heba Fastighets

Click here to see how much of its profit Heba Fastighets paid out over the last 12 months.

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. Heba Fastighets’s earnings per share have fallen at approximately 17% a year over the previous five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Heba Fastighets has increased its dividend at approximately 3.9% a year on average.

Final Takeaway

From a dividend perspective, should investors buy or avoid Heba Fastighets? 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. Overall, it’s hard to get excited about Heba Fastighets from a dividend perspective.

On that note, you’ll want to research what risks Heba Fastighets is facing. For instance, we’ve identified 4 warning signs for Heba Fastighets (2 are a bit concerning) you should be aware of.

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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.