Don't Race Out To Buy HITECHPROS Société anonyme (EPA:ALHIT) Just Because It's Going Ex-Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see HITECHPROS Société anonyme (EPA:ALHIT) is about to trade ex-dividend in the next three days. Typically, the ex-dividend date is two business days 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 as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase HITECHPROS Société anonyme's shares on or after the 3rd of September will not receive the dividend, which will be paid on the 5th of September.

The company's next dividend payment will be €1.00 per share. Last year, in total, the company distributed €1.30 to shareholders. Looking at the last 12 months of distributions, HITECHPROS Société anonyme has a trailing yield of approximately 7.7% on its current stock price of €16.90. 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 HITECHPROS Société anonyme has been able to grow its dividends, or if the dividend might be cut.

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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. HITECHPROS Société anonyme distributed an unsustainably high 115% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.

View our latest analysis for HITECHPROS Société anonyme

Click here to see how much of its profit HITECHPROS Société anonyme paid out over the last 12 months.

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. 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 HITECHPROS Société anonyme's earnings per share have remained effectively flat 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.

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, HITECHPROS Société anonyme has increased its dividend at approximately 7.2% a year on average.

The Bottom Line

Should investors buy HITECHPROS Société anonyme for the upcoming dividend? Earnings per share have not grown at all and HITECHPROS Société anonyme is paying out an uncomfortably high percentage of its profit as dividends. HITECHPROS Société anonyme doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that in mind though, if the poor dividend characteristics of HITECHPROS Société anonyme don't faze you, it's worth being mindful of the risks involved with this business. Case in point: We've spotted 1 warning sign for HITECHPROS Société anonyme you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.