We.Connect SA (EPA:ALWEC) Looks Interesting, And It's About To Pay A Dividend

We.Connect SA (EPA:ALWEC) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Meaning, you will need to purchase We.Connect's shares before the 10th of June to receive the dividend, which will be paid on the 12th of June.

The company's next dividend payment will be €0.40 per share, on the back of last year when the company paid a total of €0.40 to shareholders. Based on the last year's worth of payments, We.Connect has a trailing yield of 2.1% on the current stock price of €19.10. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for We.Connect

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. We.Connect has a low and conservative payout ratio of just 14% of its income after tax.

Click here to see how much of its profit We.Connect 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 fall far enough, the company could be forced to cut its dividend. That's why we're glad to see earnings per share up 14% over the past 12 months.

We do note though, one year is too short a time to be drawing strong conclusions about a company's future growth prospects.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. We.Connect has delivered 17% dividend growth per year on average over the past seven years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Is We.Connect an attractive dividend stock, or better left on the shelf? It's great that We.Connect is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in We.Connect for the dividends alone, you should always be mindful of the risks involved. For example, we've found 3 warning signs for We.Connect that we recommend you consider before investing in the business.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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.