Vogiatzoglou Systems S.A. (ATH:VOSYS) stock is about to trade ex-dividend in 3 days. Ex-dividend means that investors that purchase the stock on or after the 17th of September will not receive this dividend, which will be paid on the 24th of September.
Vogiatzoglou Systems’s next dividend payment will be €0.095 per share, on the back of last year when the company paid a total of €0.10 to shareholders. Last year’s total dividend payments show that Vogiatzoglou Systems has a trailing yield of 5.8% on the current share price of €1.79. 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! So we need to investigate whether Vogiatzoglou Systems can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Vogiatzoglou Systems paid out more than half (63%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Vogiatzoglou Systems paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.
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 Vogiatzoglou Systems has grown its earnings rapidly, up 51% a year for the past five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Vogiatzoglou Systems’s dividend payments per share have declined at 8.1% per year on average over the past 10 years, which is uninspiring. It’s unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We’d hope it’s because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
The Bottom Line
Is Vogiatzoglou Systems an attractive dividend stock, or better left on the shelf? It’s good to see that earnings per share are growing and that the company’s payout ratio is within a normal range for most businesses. However we’re somewhat concerned that it paid out -229% of its cashflow, which is uncomfortably high. To summarise, Vogiatzoglou Systems looks okay on this analysis, although it doesn’t appear a stand-out opportunity.
If you want to look further into Vogiatzoglou Systems, it’s worth knowing the risks this business faces. In terms of investment risks, we’ve identified 2 warning signs with Vogiatzoglou Systems and understanding them should be part of your investment process.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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