Interested In Métropole Télévision's (EPA:MMT) Upcoming €1.25 Dividend? You Have Three Days Left

Métropole Télévision S.A. (EPA:MMT) stock is about to trade ex-dividend in 3 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Métropole Télévision investors that purchase the stock on or after the 30th of April will not receive the dividend, which will be paid on the 3rd of May.

The company's upcoming dividend is €1.25 a share, following on from the last 12 months, when the company distributed a total of €1.25 per share to shareholders. Calculating the last year's worth of payments shows that Métropole Télévision has a trailing yield of 8.7% on the current share price of €14.32. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Métropole Télévision has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Métropole Télévision

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. Métropole Télévision paid out more than half (67%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year it paid out 60% of its free cash flow as dividends, within the usual range for most companies.

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.

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

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. 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 Métropole Télévision, with earnings per share up 6.1% on average over the last five years. Decent historical earnings per share growth suggests Métropole Télévision has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Métropole Télévision has increased its dividend at approximately 3.9% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Has Métropole Télévision got what it takes to maintain its dividend payments? Earnings per share have been growing modestly and Métropole Télévision paid out a bit over half of its earnings and free cash flow last year. To summarise, Métropole Télévision looks okay on this analysis, although it doesn't appear a stand-out opportunity.

With that being said, if dividends aren't your biggest concern with Métropole Télévision, you should know about the other risks facing this business. We've identified 2 warning signs with Métropole Télévision (at least 1 which shouldn't be ignored), and understanding them should be part of your investment process.

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