It looks like Møns Bank A/S (CPH:MNBA) is about to go ex-dividend in the next 3 days. You can purchase shares before the 26th of March in order to receive the dividend, which the company will pay on the 30th of March.
Møns Bank's next dividend payment will be ø2.00 per share. Last year, in total, the company distributed ø2.00 to shareholders. Based on the last year's worth of payments, Møns Bank stock has a trailing yield of around 1.8% on the current share price of DKK109. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Møns Bank has a low and conservative payout ratio of just 12% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Møns Bank's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Møns Bank dividends are largely the same as they were seven years ago.
Should investors buy Møns Bank for the upcoming dividend? Møns Bank's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
If you're not too concerned about Møns Bank's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example - Møns Bank has 3 warning signs we think you should be aware of.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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