Telenor ASA (OB:TEL) is about to commerce ex-dividend within the subsequent 3 days. Usually, the ex-dividend date is one enterprise day earlier than the report date which is the date on which an organization determines the shareholders eligible to obtain a dividend. The ex-dividend date is vital as a result of any transaction on a inventory must have been settled earlier than the report date so as to be eligible for a dividend. Because of this traders who buy Telenor’s shares on or after the sixth of October is not going to obtain the dividend, which shall be paid on the nineteenth of October.
The corporate’s subsequent dividend fee shall be kr4.30 per share, on the again of final 12 months when the corporate paid a complete of kr9.30 to shareholders. Trying on the final 12 months of distributions, Telenor has a trailing yield of roughly 9.3% on its present inventory worth of NOK99.66. We love seeing corporations pay a dividend, nevertheless it’s additionally vital to make certain that laying the golden eggs is not going to kill our golden goose! Consequently, readers ought to at all times examine whether or not Telenor has been in a position to develop its dividends, or if the dividend may be reduce.
View our newest evaluation for Telenor
If an organization pays out extra in dividends than it earned, then the dividend would possibly grow to be unsustainable – hardly a perfect scenario. Telenor distributed an unsustainably excessive 129% of its revenue as dividends to shareholders final 12 months. With out extra sustainable fee behaviour, the dividend appears to be like precarious. But money circulate is often extra vital than revenue for assessing dividend sustainability, so we must always at all times examine if the corporate generated sufficient money to afford its dividend. Dividends consumed 60% of the corporate’s free money circulate final 12 months, which is inside a traditional vary for many dividend-paying organisations.
It is good to see that whereas Telenor’s dividends weren’t coated by income, a minimum of they’re inexpensive from a money perspective. Nonetheless, if the corporate repeatedly paid a dividend larger than its income, we would be involved. Only a few corporations are in a position to sustainably pay dividends bigger than their reported earnings.
Click on right here to see the corporate’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Rising?
Firms that are not rising their earnings can nonetheless be beneficial, however it’s much more vital to evaluate the sustainability of the dividend if it appears to be like like the corporate will battle to develop. If earnings fall far sufficient, the corporate may very well be pressured to chop its dividend. With that in thoughts, we’re not enthused to see that Telenor’s earnings per share have remained successfully flat over the previous 5 years. We would take that over an earnings decline any day, however in the long term, one of the best dividend shares all develop their earnings per share.
The principle manner most traders will assess an organization’s dividend prospects is by checking the historic fee of dividend progress. Within the final 10 years, Telenor has lifted its dividend by roughly 6.4% a 12 months on common.
The Backside Line
Has Telenor obtained what it takes to keep up its dividend funds? Earnings per share have barely moved in latest occasions, and the corporate is paying out an uncomfortably excessive share of its revenue. Fortuitously its money technology was considerably stronger. With the way in which issues are shaping up from a dividend perspective, we would be inclined to avoid Telenor.
Though, for those who’re nonetheless excited about Telenor and wish to know extra, you will discover it very helpful to know what dangers this inventory faces. By way of funding dangers, we have recognized 3 warning indicators with Telenor and understanding them ought to be a part of your funding course of.
Typically, we would not advocate simply shopping for the primary dividend inventory you see. This is a curated record of attention-grabbing shares which can be sturdy dividend payers.
Valuation is advanced, however we’re serving to make it easy.
Discover out whether or not Telenor is probably over or undervalued by testing our complete evaluation, which incorporates truthful worth estimates, dangers and warnings, dividends, insider transactions and monetary well being.
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This text by Merely Wall St is basic in nature. We offer commentary based mostly on historic knowledge and analyst forecasts solely utilizing an unbiased methodology and our articles aren’t supposed to be monetary recommendation. It doesn’t represent a suggestion to purchase or promote any inventory, and doesn’t take account of your aims, or your monetary scenario. We purpose to convey you long-term centered evaluation pushed by elementary knowledge. Be aware that our evaluation could not issue within the newest price-sensitive firm bulletins or qualitative materials. Merely Wall St has no place in any shares talked about.