Should Income Investors Look At DLSI (EPA:ALDLS) Before Its Ex-Dividend?

DLSI (EPA:ALDLS) stock is about to trade ex-dividend in 2 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. In other words, investors can purchase DLSI's shares before the 1st of July in order to be eligible for the dividend, which will be paid on the 3rd of July.

The company's next dividend payment will be €0.40 per share. Last year, in total, the company distributed €0.40 to shareholders. Looking at the last 12 months of distributions, DLSI has a trailing yield of approximately 3.1% on its current stock price of €13.00. If you buy this business for its dividend, you should have an idea of whether DLSI's dividend is reliable and sustainable. So we need to investigate whether DLSI can afford its dividend, and if the dividend could grow.

Check out our latest analysis for DLSI

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. DLSI is paying out just 21% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Click here to see how much of its profit DLSI paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. DLSI's earnings per share have fallen at approximately 13% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, DLSI has lifted its dividend by approximately 5.7% a year on average.

The Bottom Line

Is DLSI an attractive dividend stock, or better left on the shelf? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. It doesn't appear an outstanding opportunity, but could be worth a closer look.

If you want to look further into DLSI, it's worth knowing the risks this business faces. To that end, you should learn about the 3 warning signs we've spotted with DLSI (including 1 which is significant).

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com