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Important news for shareholders and potential investors in EVRY ASA (OB:EVRY): The dividend payment of øre1.75 per share will be distributed to shareholders on 30 April 2019, and the stock will begin trading ex-dividend at an earlier date, 12 April 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into EVRY's latest financial data to analyse its dividend attributes.
View our latest analysis for EVRY
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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Is its annual yield among the top 25% of dividend-paying companies?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has the amount of dividend per share grown 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 the company be able to keep paying dividend based on the future earnings growth?
Does EVRY pass our checks?
The company currently pays out 101% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is not well-covered by its earnings. However, going forward, analysts expect EVRY's payout to fall into a more sustainable range of 60% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 6.2%. In addition to this, EPS should increase to NOK2.4, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. 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 EVRY as a dividend investment. It has only been consistently paying dividends for 7 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, EVRY generates a yield of 5.6%, which is high for IT stocks but still below the market's top dividend payers.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in EVRY for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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 essential aspects you should further examine: