Just Three Days Till ABC arbitrage SA (EPA:ABCA) Will Be Trading Ex-Dividend

ABC arbitrage SA (EPA:ABCA) stock is about to trade ex-dividend in three 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. Accordingly, ABC arbitrage investors that purchase the stock on or after the 5th of December will not receive the dividend, which will be paid on the 7th of December.

The company's next dividend payment will be €0.10 per share. Last year, in total, the company distributed €0.44 to shareholders. Last year's total dividend payments show that ABC arbitrage has a trailing yield of 8.7% on the current share price of €5.07. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether ABC arbitrage has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for ABC arbitrage

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. ABC arbitrage paid out more than half (57%) of its earnings last year, which is a regular payout ratio for most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters 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 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 ABC arbitrage, with earnings per share up 2.7% on average over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. ABC arbitrage has seen its dividend decline 0.7% per annum on average over the past 10 years, which is not great to see.

The Bottom Line

Has ABC arbitrage got what it takes to maintain its dividend payments? ABC arbitrage has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. It doesn't appear an outstanding opportunity, but could be worth a closer look.

So if you want to do more digging on ABC arbitrage, you'll find it worthwhile knowing the risks that this stock faces. Case in point: We've spotted 1 warning sign for ABC arbitrage 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.

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.