Should Income Investors Look At TXCOM Société Anonyme (EPA:ALTXC) Before Its Ex-Dividend?

Readers hoping to buy TXCOM Société Anonyme (EPA:ALTXC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. This means that investors who purchase TXCOM Société Anonyme's shares on or after the 25th of September will not receive the dividend, which will be paid on the 27th of September.

The company's next dividend payment will be €0.30 per share, and in the last 12 months, the company paid a total of €0.30 per share. Based on the last year's worth of payments, TXCOM Société Anonyme stock has a trailing yield of around 2.6% on the current share price of €11.7. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether TXCOM Société Anonyme can afford its dividend, and if the dividend could grow.

Check out our latest analysis for TXCOM Société Anonyme

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. TXCOM Société Anonyme paid out more than half (52%) of its earnings last year, which is a regular payout ratio for most companies. A useful secondary check can be to evaluate whether TXCOM Société Anonyme generated enough free cash flow to afford its dividend.

Click here to see how much of its profit TXCOM Société Anonyme 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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see TXCOM Société Anonyme earnings per share are up 7.8% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past two years, TXCOM Société Anonyme has increased its dividend at approximately 37% 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.

To Sum It Up

Is TXCOM Société Anonyme worth buying for its dividend? TXCOM Société Anonyme is paying out a reasonable percentage of its income and an uncomfortably high -135% of its cash flow as dividends. At least earnings per share have been growing steadily. It's not the most attractive proposition from a dividend perspective, and we'd probably give this one a miss for now.

With that being said, if you're still considering TXCOM Société Anonyme as an investment, you'll find it beneficial to know what risks this stock is facing. For example, we've found 5 warning signs for TXCOM Société Anonyme (1 shouldn't be ignored!) 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.