Interested In Afluente Transmissão de Energia Elétrica's (BVMF:AFLT3) Upcoming R$0.3253898 Dividend? You Have Four Days Left

Readers hoping to buy Afluente Transmissão de Energia Elétrica S.A. (BVMF:AFLT3) 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 two business days 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. Meaning, you will need to purchase Afluente Transmissão de Energia Elétrica's shares before the 15th of April to receive the dividend, which will be paid on the 31st of December.

The company's next dividend payment will be R$0.3253898 per share, and in the last 12 months, the company paid a total of R$0.21 per share. Based on the last year's worth of payments, Afluente Transmissão de Energia Elétrica stock has a trailing yield of around 2.9% on the current share price of R$7.30. 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 Afluente Transmissão de Energia Elétrica can afford its dividend, and if the dividend could grow.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Afluente Transmissão de Energia Elétrica's payout ratio is modest, at just 40% of profit. 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. It paid out an unsustainably high 355% of its free cash flow as dividends over the past 12 months, which is worrying. Unless there were something in the business we're not grasping, this could signal a risk that the dividend may have to be cut in the future.

While Afluente Transmissão de Energia Elétrica'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. Were this to happen repeatedly, this would be a risk to Afluente Transmissão de Energia Elétrica's ability to maintain its dividend.

See our latest analysis for Afluente Transmissão de Energia Elétrica

Click here to see how much of its profit Afluente Transmissão de Energia Elétrica paid out over the last 12 months.

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 Afluente Transmissão de Energia Elétrica earnings per share are up 6.1% per annum over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Afluente Transmissão de Energia Elétrica's dividend payments per share have declined at 0.5% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

Should investors buy Afluente Transmissão de Energia Elétrica for the upcoming dividend? Afluente Transmissão de Energia Elétrica has seen its earnings per share grow steadily and paid out less than half its profit over the last year. Unfortunately, its dividend was not well covered by free cash flow. To summarise, Afluente Transmissão de Energia Elétrica looks okay on this analysis, although it doesn't appear a stand-out opportunity.

If you want to look further into Afluente Transmissão de Energia Elétrica, it's worth knowing the risks this business faces. Our analysis shows 1 warning sign for Afluente Transmissão de Energia Elétrica and you should be aware of this before buying any 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.