Do These 3 Checks Before Buying Fazerles AD (BUL:FZLS) For Its Upcoming Dividend

By
Simply Wall St
Published
June 23, 2021
BUL:FZLS
Source: Shutterstock

It looks like Fazerles AD (BUL:FZLS) is about to go ex-dividend in the next 4 days. 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. 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. In other words, investors can purchase Fazerles AD's shares before the 29th of June in order to be eligible for the dividend, which will be paid on the 2nd of August.

The company's upcoming dividend is лв1.00 a share, following on from the last 12 months, when the company distributed a total of лв1.00 per share to shareholders. Last year's total dividend payments show that Fazerles AD has a trailing yield of 4.8% on the current share price of BGN21. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Fazerles AD

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. Fazerles AD paid out 146% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.

Click here to see how much of its profit Fazerles AD paid out over the last 12 months.

historic-dividend
BUL:FZLS Historic Dividend June 24th 2021

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Fazerles AD earnings per share are up 5.0% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Fazerles AD has lifted its dividend by approximately 17% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Is Fazerles AD an attractive dividend stock, or better left on the shelf? Fazerles AD has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

So if you want to do more digging on Fazerles AD, you'll find it worthwhile knowing the risks that this stock faces. We've identified 3 warning signs with Fazerles AD (at least 2 which are potentially serious), 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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