Sofia Commerce-Pawn Brokerage AD (BUL:SCOM) Looks Interesting, And It's About To Pay A Dividend

Readers hoping to buy Sofia Commerce-Pawn Brokerage AD (BUL:SCOM) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Sofia Commerce-Pawn Brokerage AD's shares on or after the 23rd of January, you won't be eligible to receive the dividend, when it is paid on the 10th of March.

The company's next dividend payment will be лв0.12 per share. Last year, in total, the company distributed лв0.10 to shareholders. Calculating the last year's worth of payments shows that Sofia Commerce-Pawn Brokerage AD has a trailing yield of 1.6% on the current share price of лв6.40. 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 Sofia Commerce-Pawn Brokerage AD can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Sofia Commerce-Pawn Brokerage AD

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Sofia Commerce-Pawn Brokerage AD is paying out just 16% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

When a company paid out less in dividends than it earned in profit, this generally suggests 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 business enters a downturn.

Click here to see how much of its profit Sofia Commerce-Pawn Brokerage AD paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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 Sofia Commerce-Pawn Brokerage AD has grown its earnings rapidly, up 44% 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. Sofia Commerce-Pawn Brokerage AD's dividend payments per share have declined at 9.7% per year on average over the past nine 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.

To Sum It Up

Is Sofia Commerce-Pawn Brokerage AD an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Sofia Commerce-Pawn Brokerage AD looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while Sofia Commerce-Pawn Brokerage AD looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 3 warning signs for Sofia Commerce-Pawn Brokerage AD (1 shouldn't be ignored!) that you ought to be aware of before buying the shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.