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It looks like Kallebäck Property Invest AB (publ) (STO:KAPIAB) is about to go ex-dividend in the next 1 days. Ex-dividend means that investors that purchase the stock on or after the 27th of September will not receive this dividend, which will be paid on the 3rd of October.
Kallebäck Property Invest's next dividend payment will be kr3.0 per share, on the back of last year when the company paid a total of kr12.0 to shareholders. Based on the last year's worth of payments, Kallebäck Property Invest stock has a trailing yield of around 6.6% on the current share price of SEK181. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Kallebäck Property Invest has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Kallebäck Property Invest
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Kallebäck Property Invest paid out 124% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance. 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. It paid out 93% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want look more closely here.
Cash is slightly more important than profit from a dividend perspective, but given Kallebäck Property Invest's payments were not well covered by either earnings or cash flow, we are concerned about the sustainability of this dividend.
Click here to see how much of its profit Kallebäck Property Invest paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Kallebäck Property Invest has grown its earnings rapidly, up 118% a year for the past five years. Earnings per share have been growing rapidly, but the company is paying out an uncomfortably high percentage of its earnings as dividends. Generally, when a company is growing this quickly and paying out all of its earnings as dividends, it can suggest either that the company is borrowing heavily to fund its growth, or that earnings growth is likely to slow due to lack of reinvestment.