We Wouldn't Be Too Quick To Buy Applus Services, S.A. (BME:APPS) Before It Goes Ex-Dividend

By
Simply Wall St
Published
July 01, 2021
BME:APPS
Source: Shutterstock

It looks like Applus Services, S.A. (BME:APPS) is about to go ex-dividend in the next 4 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. Therefore, if you purchase Applus Services' shares on or after the 6th of July, you won't be eligible to receive the dividend, when it is paid on the 8th of July.

The company's next dividend payment will be €0.12 per share. Last year, in total, the company distributed €0.15 to shareholders. Based on the last year's worth of payments, Applus Services stock has a trailing yield of around 1.8% on the current share price of €8.24. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Applus Services has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Applus Services

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. Applus Services reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

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

historic-dividend
BME:APPS Historic Dividend July 1st 2021

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Applus Services was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Applus Services has delivered 7.0% dividend growth per year on average over the past six years.

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

To Sum It Up

Has Applus Services got what it takes to maintain its dividend payments? These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

So if you're still interested in Applus Services despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. Our analysis shows 2 warning signs for Applus Services that we strongly recommend you have a look at before investing in the company.

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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