Three days left to buy Novotek AB (STO:NTEK B) before the ex-dividend date

It resembles Novotek AB (STO:NTEK B) is about to go ex-dividend in the next three days. The ex-dividend date is one business day before the record date. This is the cut-off date by which shareholders must be present on the company’s books to be eligible for a dividend payment. The ex-dividend date is important because the settlement process takes two full business days. So if you miss that date, you won’t appear on the company’s books on the record date. Accordingly, Novotek investors who purchase the stock on or after May 7 will not receive the dividend, which will be paid on May 14.

The company’s next dividend payment will be kr01.65 per share, following last year when the company paid a total of kr1.65 to shareholders. Last year’s total dividend payments show that Novotek has a rolling yield of 2.5% on the current share price of kr065.60. Dividends make an important contribution to investment returns for long-term owners, but only if the dividend continues to be paid. As a result, readers should always check whether Novotek has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Novotek

Dividends are usually paid from company profits. If a company pays more in dividends than it earned in profits, the dividend may be unsustainable. Novotek paid out 53% of its profits to investors last year, a normal payout level for most companies. Yet cash flow is usually more important than profit for assessing the sustainability of dividends, so we should always check whether the company generated enough cash to afford its dividend. It paid out 43% of its free cash flow in the form of dividends, a comfortable payout level for most companies.

It’s encouraging to see that the dividend is covered by both profits and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.

Click here to see how much of Novotek’s profit it paid out over the last twelve months.

historic dividend
OM:NTEK B Historical dividend May 3, 2024

Have profits and dividends grown?

Stocks in companies that generate sustainable earnings growth often offer the best dividend prospects, because it is easier to increase the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. That’s why it’s a relief to see that Novotek’s earnings per share have grown 6.7% per year over the past five years. Decent historical earnings per share growth indicates that Novotek has effectively increased shareholder value. However, it now pays out more than half of its profits as dividends. Therefore, it is unlikely that the company will be able to reinvest heavily in its operations, which could portend slower growth in the future.

Another important way to gauge a company’s dividend prospects is to measure the historical rate of dividend growth. Since our data began a decade ago, Novotek has increased its dividend by about 5.1% per year on average. We’re glad to see dividends rising along with profits over a number of years, which could be a sign the company plans to share the growth with shareholders.

Last takeaway

Does Novotek have what it takes to maintain its dividend payments? While earnings per share growth has been modest, Novotek’s dividend payments are around an average level; Without a sharp change in earnings, we believe the dividend is likely to be somewhat sustainable. Fortunately, the company paid out a conservatively low percentage of its free cash flow. It might be worth exploring whether the company is reinvesting in growth projects that could boost earnings and dividends in the future, but for now we’re not too optimistic about the dividend prospects.

In that regard, you’ll want to investigate what risks Novotek faces. Every company has risks, and we have noticed that 2 warning signs for Novotek you should know.

If you’re looking for strong dividend payers, we recommend it View our selection of top dividend stocks.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.