Read This Before Considering Stradim Espace Finances SA (EPA:ALSAS) For Its Upcoming €0.18 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Stradim Espace Finances SA (EPA:ALSAS) is about to trade 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Thus, you can purchase Stradim Espace Finances' shares before the 4th of September in order to receive the dividend, which the company will pay on the 6th of September.

The company's upcoming dividend is €0.18 a share, following on from the last 12 months, when the company distributed a total of €0.18 per share to shareholders. Based on the last year's worth of payments, Stradim Espace Finances stock has a trailing yield of around 3.2% on the current share price of €5.70. If you buy this business for its dividend, you should have an idea of whether Stradim Espace Finances's dividend is reliable and sustainable. So we need to investigate whether Stradim Espace Finances can afford its dividend, and if the dividend could grow.

View our latest analysis for Stradim Espace Finances

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. Stradim Espace Finances is paying out just 18% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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. Stradim Espace Finances paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Click here to see how much of its profit Stradim Espace Finances 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Stradim Espace Finances, with earnings per share up 8.0% on average over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Stradim Espace Finances has seen its dividend decline 1.0% per annum on average over the past 10 years, which is not great to see.

The Bottom Line

Should investors buy Stradim Espace Finances for the upcoming dividend? Stradim Espace Finances has seen its earnings per share grow steadily and paid out less than half its profit over the last year. Unfortunately, its dividend was not well covered by free cash flow. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

However if you're still interested in Stradim Espace Finances as a potential investment, you should definitely consider some of the risks involved with Stradim Espace Finances. Our analysis shows 4 warning signs for Stradim Espace Finances that we strongly recommend you have a look at before investing in the company.

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.