Be Sure To Check Out Intertape Polymer Group Inc. (TSE:ITP) Before It Goes Ex-Dividend

It looks like Intertape Polymer Group Inc. (TSE:ITP) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 15th of December to receive the dividend, which will be paid on the 31st of December.

Intertape Polymer Group's next dividend payment will be US$0.16 per share, and in the last 12 months, the company paid a total of US$0.63 per share. Based on the last year's worth of payments, Intertape Polymer Group has a trailing yield of 3.2% on the current stock price of CA$25.41. 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 Intertape Polymer Group

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. Intertape Polymer Group paid out 53% of its earnings to investors last year, a normal payout level for most businesses. A useful secondary check can be to evaluate whether Intertape Polymer Group generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 26% of the free cash flow it generated, which is a comfortable payout ratio.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Intertape Polymer Group's earnings per share have been growing at 14% a year for the past five years. Intertape Polymer Group is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past eight years, Intertape Polymer Group has increased its dividend at approximately 19% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

Should investors buy Intertape Polymer Group for the upcoming dividend? Intertape Polymer Group's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Intertape Polymer Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Intertape Polymer Group has an appealing dividend, it's worth knowing the risks involved with this stock. We've identified 4 warning signs with Intertape Polymer Group (at least 1 which can't be ignored), and understanding these should be part of your investment process.

If you're in the market for dividend stocks, we recommend checking our list of top 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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