Make these 3 checks before you buy Supply IT Sweden AB (publ) (NGM: PROVIT) for its upcoming dividend
Provide IT Sweden AB (publ) (NGM: PROVIT) is about to trade ex-dividends for the next four days. Typically, the ex-dividend date is a working day before the record date, which is the date on which a company determines the shareholders who are entitled to a dividend. It is important to be aware of the date of the ex-dividend as all trading in the share must have been settled before or before the record date. Consequently, investors in IT Sweden who buy the share on 30 September or later do not provide the dividend, which will be paid on 6 October.
The company’s next dividend will be SEK 0.46 per share, last year when the company paid a total of SEK 0.46 to shareholders. Based on last year’s payments, the Provide IT Sweden share has a subsequent return of approximately 4.9% at the current share price of SEK 9.46. We love to see companies pay dividends, but it’s also important to be sure that laying golden eggs will not kill our golden goose! So we have to investigate whether Provide IT Sweden can afford its dividend, and whether the dividend can grow.
See our latest analysis for Provide IT Sweden
Dividends are usually paid out of the company’s profits, so if a company pays out more than it has earned, its dividend is usually at greater risk of being cut. It paid out 80% of its profit as a dividend last year, which is not unreasonable, but limits reinvestments in the business and leaves the dividend vulnerable to a company’s decline. This can be a problem if the results start to drop.
Click here to see how much of their profit Provide IT Sweden paid out in the last 12 months.
Have profits and dividends increased?
Companies with shrinking results are tricky from a dividend perspective. Investors love dividends, so if earnings fall and dividends fall, expect a stock to sell sharply at the same time. With that in mind, we are disappointed to provide IT Sweden’s 8.3% per year reduced results over the past five years. When earnings per share fall, the maximum dividend amount that can be paid also falls.
Another important way to measure a company’s dividend potential is by measuring its historical dividend growth. Provide IT Sweden has seen its dividend decrease by an average of 6.4% per year over the past four years, which is not good to see. It’s never nice to see results and dividends fall, but at least management has lowered the dividend rather than potentially risking the company’s health in an attempt to keep it.
Is Provide IT Sweden an attractive dividend share, or better left on the shelf? Earnings per share have fallen and the company pays out more than half of its earnings to shareholders; not an enticing combination. These characteristics generally do not lead to outstanding dividend performance, and investors may not be happy with the outcome of owning this stock for their dividend.
With that in mind, but if the poor dividend characteristics of Provide IT Sweden do not surprise you, it is worth thinking about the risks of this business. To help with this, we have discovered 4 warning signs for Provide IT Sweden (2 apply!) Which you should be aware of before buying the shares.
However, we would not recommend buying the first dividend stock you see. Here is a list of interesting dividend stocks with a return of more than 2% and an upcoming dividend.
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This article by Simply Wall St is general. We provide comments based on historical data and analyst forecasts only using an impartial method and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. We strive to provide you with a long-term focused analysis driven by basic data. Please note that our analysis may not affect the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the aforementioned shares.
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