Stock Analysis

Is It Worth Considering AXA SA (EPA:CS) For Its Upcoming Dividend?

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It looks like AXA SA (EPA:CS) is about to go ex-dividend in the next 4 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, AXA investors that purchase the stock on or after the 8th of May will not receive the dividend, which will be paid on the 10th of May.

The company's upcoming dividend is €1.70 a share, following on from the last 12 months, when the company distributed a total of €1.70 per share to shareholders. Looking at the last 12 months of distributions, AXA has a trailing yield of approximately 5.9% on its current stock price of €28.84. If you buy this business for its dividend, you should have an idea of whether AXA's dividend is reliable and sustainable. So we need to investigate whether AXA can afford its dividend, and if the dividend could grow.

See our latest analysis for AXA

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. AXA paid out 60% of its earnings to investors last year, a normal payout level for most businesses.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

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

ENXTPA:CS Historic Dividend May 3rd 2023

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. 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 not enthused to see that AXA's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

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, AXA has increased its dividend at approximately 9.4% a year on average.

The Bottom Line

Is AXA an attractive dividend stock, or better left on the shelf? AXA's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

If you're not too concerned about AXA's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, we've found 2 warning signs for AXA (1 is a bit concerning!) that deserve your attention before investing in the shares.

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.

Valuation is complex, but we're helping make it simple.

Find out whether AXA is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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