Why It Might Not Make Sense To Buy ZCCM Investments Holdings Plc (EPA:MLZAM) For Its Upcoming Dividend

ZCCM Investments Holdings Plc (EPA:MLZAM) stock is about to trade ex-dividend in 2 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Therefore, if you purchase ZCCM Investments Holdings' shares on or after the 25th of July, you won't be eligible to receive the dividend, when it is paid on the 29th of July.

The company's next dividend payment will be K01.51 per share, on the back of last year when the company paid a total of K2.41 to shareholders. Calculating the last year's worth of payments shows that ZCCM Investments Holdings has a trailing yield of 5.7% on the current share price of €1.53. 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.

Check out our latest analysis for ZCCM Investments Holdings

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. ZCCM Investments Holdings reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

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

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. ZCCM Investments Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. ZCCM Investments Holdings has delivered an average of 4.4% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Get our latest analysis on ZCCM Investments Holdings's balance sheet health here.

To Sum It Up

Is ZCCM Investments Holdings worth buying for its dividend? All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

With that being said, if you're still considering ZCCM Investments Holdings as an investment, you'll find it beneficial to know what risks this stock is facing. For example, we've found 4 warning signs for ZCCM Investments Holdings (2 don't sit too well with us!) that deserve your attention before investing in the shares.

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.

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