Three Days Left To Buy Signaux Girod S.A. (EPA:ALGIR) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Signaux Girod S.A. (EPA:ALGIR) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order 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. Thus, you can purchase Signaux Girod's shares before the 8th of April in order to receive the dividend, which the company will pay on the 10th of April.

The company's next dividend payment will be €1.50 per share, and in the last 12 months, the company paid a total of €1.50 per share. Based on the last year's worth of payments, Signaux Girod has a trailing yield of 7.6% on the current stock price of €19.80. If you buy this business for its dividend, you should have an idea of whether Signaux Girod's dividend is reliable and sustainable. So we need to investigate whether Signaux Girod can afford its dividend, and if the dividend could grow.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Signaux Girod distributed an unsustainably high 172% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut. 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. What's good is that dividends were well covered by free cash flow, with the company paying out 14% of its cash flow last year.

It's good to see that while Signaux Girod's dividends were not covered by profits, at least they are affordable from a cash perspective. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.

Check out our latest analysis for Signaux Girod

Click here to see how much of its profit Signaux Girod paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Signaux Girod earnings per share are up 3.3% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Signaux Girod has lifted its dividend by approximately 4.1% 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.

Final Takeaway

From a dividend perspective, should investors buy or avoid Signaux Girod? Signaux Girod has been steadily growing its earnings per share, and it is paying out just 14% of its cash flow but an uncomfortably high 172% of its income. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

If you want to look further into Signaux Girod, it's worth knowing the risks this business faces. Case in point: We've spotted 4 warning signs for Signaux Girod you should be aware of.

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.