Altus Group Limited (TSE:AIF) Stock Goes Ex-Dividend In Just Three Days

It looks like Altus Group Limited (TSE:AIF) is about to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Altus Group's shares before the 30th of March to receive the dividend, which will be paid on the 18th of April.

The company's next dividend payment will be CA$0.15 per share, on the back of last year when the company paid a total of CA$0.60 to shareholders. Calculating the last year's worth of payments shows that Altus Group has a trailing yield of 1.2% on the current share price of CA$48.05. 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 check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Altus Group

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. Altus Group paid out 97% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 47% of the free cash flow it generated, which is a comfortable payout ratio.

It's good to see that while Altus Group's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

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 earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Altus Group earnings per share are up 8.5% per annum over the last five years.

We'd also point out that Altus Group issued a meaningful number of new shares in the past year. Trying to grow the dividend while issuing large amounts of new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Altus Group dividends are largely the same as they were 10 years ago.

The Bottom Line

Is Altus Group worth buying for its dividend? Earnings per share have grown modestly, and last year Altus Group paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. Overall, it's hard to get excited about Altus Group from a dividend perspective.

If you're not too concerned about Altus Group's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Case in point: We've spotted 3 warning signs for Altus Group you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.