Poulaillon SA (EPA:ALPOU) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Poulaillon SA (EPA:ALPOU) is about to trade ex-dividend in the next 2 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Poulaillon's shares on or after the 7th of April, you won't be eligible to receive the dividend, when it is paid on the 9th of April.

The company's next dividend payment will be €0.08 per share, and in the last 12 months, the company paid a total of €0.08 per share. Last year's total dividend payments show that Poulaillon has a trailing yield of 1.6% on the current share price of €5.15. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

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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. Poulaillon has a low and conservative payout ratio of just 6.8% of its income after tax. 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. The good news is it paid out just 2.3% of its free cash flow in the last year.

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.

View our latest analysis for Poulaillon

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

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. With that in mind, it's good to see earnings have grown 16% on last year. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

Unfortunately Poulaillon has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is Poulaillon an attractive dividend stock, or better left on the shelf? We love that Poulaillon is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. There's a lot to like about Poulaillon, and we would prioritise taking a closer look at it.

In light of that, while Poulaillon has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 3 warning signs for Poulaillon (1 is concerning) you should be aware of.

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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.