Telematic Interactive Bulgaria EAD (BUL:TIB) Stock Goes Ex-Dividend In Just Three Days

Telematic Interactive Bulgaria EAD (BUL:TIB) is about to trade ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Telematic Interactive Bulgaria EAD's shares on or after the 19th of December will not receive the dividend, which will be paid on the 10th of January.

The company's next dividend payment will be лв0.28 per share, and in the last 12 months, the company paid a total of лв0.39 per share. Last year's total dividend payments show that Telematic Interactive Bulgaria EAD has a trailing yield of 1.8% on the current share price of лв22.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Telematic Interactive Bulgaria EAD can afford its dividend, and if the dividend could grow.

See our latest analysis for Telematic Interactive Bulgaria EAD

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Telematic Interactive Bulgaria EAD paying out a modest 29% of its earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Telematic Interactive Bulgaria EAD paid out more free cash flow than it generated - 144%, to be precise - last year, which we think is concerningly high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.

Telematic Interactive Bulgaria EAD does have a large net cash position on the balance sheet, which could fund large dividends for a time, if the company so chose. Still, smart investors know that it is better to assess dividends relative to the cash and profit generated by the business. Paying dividends out of cash on the balance sheet is not long-term sustainable.

While Telematic Interactive Bulgaria EAD's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Telematic Interactive Bulgaria EAD to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Click here to see how much of its profit Telematic Interactive Bulgaria EAD paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by Telematic Interactive Bulgaria EAD's 24% per annum decline in earnings in the past three years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Given that Telematic Interactive Bulgaria EAD has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

From a dividend perspective, should investors buy or avoid Telematic Interactive Bulgaria EAD? Telematic Interactive Bulgaria EAD's earnings per share have fallen noticeably and, although it paid out less than half its profit as dividends last year, it paid out a disconcertingly high percentage of its cashflow, which is not a great combination. It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being.

Although, if you're still interested in Telematic Interactive Bulgaria EAD and want to know more, you'll find it very useful to know what risks this stock faces. For example, we've found 3 warning signs for Telematic Interactive Bulgaria EAD (1 is a bit unpleasant!) that deserve your attention before investing in the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.