Read This Before Considering Nuvei Corporation (TSE:NVEI) For Its Upcoming US$0.10 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Nuvei Corporation (TSE:NVEI) is about to trade ex-dividend in the next 3 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. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Thus, you can purchase Nuvei's shares before the 17th of November in order to receive the dividend, which the company will pay on the 7th of December.

The upcoming dividend for Nuvei is US$0.10 per share. 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! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Nuvei

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. Nuvei paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Nuvei reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

This is Nuvei's first year of paying a dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.

Get our latest analysis on Nuvei's balance sheet health here.

The Bottom Line

Should investors buy Nuvei for the upcoming dividend? We're a bit uncomfortable with it paying a dividend while being loss-making. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

However if you're still interested in Nuvei as a potential investment, you should definitely consider some of the risks involved with Nuvei. In terms of investment risks, we've identified 1 warning sign with Nuvei and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.