In This Article:
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Historically, SpareBank 1 SMN (OB:MING) has paid a dividend to shareholders. It currently yields 4.9%. Let’s dig deeper into whether SpareBank 1 SMN should have a place in your portfolio.
View our latest analysis for SpareBank 1 SMN
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has it increased its dividend per share amount over the past?
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Is its earnings sufficient to payout dividend at the current rate?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does SpareBank 1 SMN fit our criteria?
SpareBank 1 SMN has a trailing twelve-month payout ratio of 40.7%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 59.4%, leading to a dividend yield of 6.0%. However, EPS is forecasted to fall to NOK9.61 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
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. Dividend payments from SpareBank 1 SMN have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, SpareBank 1 SMN has a yield of 4.9%, which is high for Banks stocks but still below the market’s top dividend payers.
Next Steps:
If SpareBank 1 SMN is in your portfolio for cash-generating reasons, there may be better alternatives out there. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three fundamental factors you should further research:
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Future Outlook: What are well-informed industry analysts predicting for MING’s future growth? Take a look at our free research report of analyst consensus for MING’s outlook.
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Valuation: What is MING worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MING is currently mispriced by the market.
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Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.