Why You Might Be Interested In Blue Island Plc (CSE:BLUE) For Its Upcoming Dividend

It looks like Blue Island Plc (CSE:BLUE) is about to go ex-dividend in the next day or two. 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Blue Island's shares on or after the 23rd of May will not receive the dividend, which will be paid on the 7th of June.

The company's next dividend payment will be €0.03 per share, on the back of last year when the company paid a total of €0.03 to shareholders. Based on the last year's worth of payments, Blue Island has a trailing yield of 2.9% on the current stock price of €1.05. 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 Blue Island can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Blue Island

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 Blue Island's payout ratio is modest, at just 29% 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.

Click here to see how much of its profit Blue Island 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. With that in mind, we're encouraged by the steady growth at Blue Island, with earnings per share up 6.8% on average over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Blue Island has delivered an average of 11% per year annual increase in its dividend, based on the past nine years of dividend payments. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Is Blue Island worth buying for its dividend? Blue Island delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and -293% of its cash flow over the last year, which is a mediocre outcome. In summary, while it has some positive characteristics, we're not inclined to race out and buy Blue Island today.

If you want to look further into Blue Island, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 2 warning signs for Blue Island you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.