Should you buy Protector Forsikring ASA (OB: PROT) for its next dividend?


Readers wishing to buy ASA Forsikring Protector (OB: PROT) for its dividend will have to act shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not appear on the books of the company on the date of registration. In other words, investors can buy Protector Forsikring shares before July 14 in order to be eligible for the dividend, which will be paid on July 21.

The company’s next dividend will be 1.67 kr per share, compared to last year when the company paid a total of 3.00 kr to shareholders. Calculation of the value of last year’s payouts shows that Protector Forsikring has a rolling 3.1% return on the current share price of NOK 96. We love to see companies pay a dividend, but it’s also important to make sure that laying the golden eggs is not going to kill our goose that lays the golden eggs! You have to see if the dividend is covered by profits and if it increases.

Check out our latest review for Protector Forsikring

Dividends are usually paid out of the company’s profits, so if a company pays more than it earned, its dividend is usually at risk of being reduced. Protector Forsikring has a low and conservative payout ratio of just 17% of its after-tax income.

When a company has paid less dividends than it made a profit, it usually suggests that its dividend is affordable. The lower the% of its profit that it pays out, the greater the margin of safety for the dividend if the company goes into recession.

Click here to see how much of its Profit Protector Forsikring has paid in the past 12 months.

OB: PROT Historical Dividend July 12, 2021

Have profits and dividends increased?

Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If profits fall 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 heartwarming that Protector Forsikring’s revenue has skyrocketed, rising 27% annually over the past five years.

Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Over the past 10 years, Protector Forsikring has increased its dividend to around 12% per year on average. Both earnings per share and dividends have been rising rapidly lately, which is great to see.

The bottom line

Should investors buy Protector Forsikring for the next dividend? Typically, companies that grow rapidly and pay a small fraction of the profits keep the profits to reinvest in the business. This strategy can bring significant added value to shareholders over the long term, provided it is applied without issuing too many new shares. Overall, Protector Forsikring appears to be a promising dividend-paying stock in this analysis, and we think it would be worth studying further.

Although it is tempting to invest in Protector Forsikring purely for dividends, you should always be aware of the risks involved. Our analysis shows 2 warning signs for Protector Forsikring which we strongly recommend that you consult before investing in the company.

If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.

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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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