Atresmedia Corporación de Medios de Comunicación (BME:A3M) Could Be A Buy For Its Upcoming Dividend

Readers hoping to buy Atresmedia Corporación de Medios de Comunicación, S.A. (BME:A3M) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. Meaning, you will need to purchase Atresmedia Corporación de Medios de Comunicación's shares before the 16th of December to receive the dividend, which will be paid on the 18th of December.

The company's next dividend payment will be €0.1701 per share. Last year, in total, the company distributed €0.42 to shareholders. Looking at the last 12 months of distributions, Atresmedia Corporación de Medios de Comunicación has a trailing yield of approximately 9.6% on its current stock price of €4.665. 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! As a result, readers should always check whether Atresmedia Corporación de Medios de Comunicación has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Atresmedia Corporación de Medios de Comunicación

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Atresmedia Corporación de Medios de Comunicación paid out more than half (56%) of its earnings last year, which is a regular payout ratio for most companies. 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 44% 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?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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, Atresmedia Corporación de Medios de Comunicación's earnings per share have been growing at 15% a year for the past five years. Atresmedia Corporación de Medios de Comunicación 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 10 years, Atresmedia Corporación de Medios de Comunicación has increased its dividend at approximately 15% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

From a dividend perspective, should investors buy or avoid Atresmedia Corporación de Medios de Comunicación? We like Atresmedia Corporación de Medios de Comunicación's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in Atresmedia Corporación de Medios de Comunicación for the dividends alone, you should always be mindful of the risks involved. For instance, we've identified 2 warning signs for Atresmedia Corporación de Medios de Comunicación (1 shouldn't be ignored) you should be aware of.

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.