Groupe Guillin S.A. (EPA:ALGIL) Pays A €0.80 Dividend In Just Four Days

Readers hoping to buy Groupe Guillin S.A. (EPA:ALGIL) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. In other words, investors can purchase Groupe Guillin's shares before the 27th of June in order to be eligible for the dividend, which will be paid on the 29th of June.

The company's next dividend payment will be €0.80 per share. Last year, in total, the company distributed €0.80 to shareholders. Looking at the last 12 months of distributions, Groupe Guillin has a trailing yield of approximately 3.1% on its current stock price of €26. 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 Groupe Guillin has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Groupe Guillin

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. Fortunately Groupe Guillin's payout ratio is modest, at just 29% of profit. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the past year it paid out 167% of its free cash flow as dividends, which is uncomfortably high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

Groupe Guillin paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to Groupe Guillin's ability to maintain its dividend.

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about Groupe Guillin's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Earnings have been growing somewhat, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Groupe Guillin has increased its dividend at approximately 15% a year on average.

The Bottom Line

Is Groupe Guillin an attractive dividend stock, or better left on the shelf? Earnings per share have been effectively flat over this time, and Groupe Guillin's paying out less than half its profits and 167% of its cash flow. Only rarely do we find companies paying out a low percentage of their profits yet a high percentage of their cash flow, so we'd mark this as a concern. In summary, while it has some positive characteristics, we're not inclined to race out and buy Groupe Guillin today.

However if you're still interested in Groupe Guillin as a potential investment, you should definitely consider some of the risks involved with Groupe Guillin. For example - Groupe Guillin has 1 warning sign we think you should be aware of.

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

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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.