Anglo-Eastern Plantations Plc (LON:AEP) Passed Our Checks, And It's About To Pay A US$0.373 Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Anglo-Eastern Plantations Plc (LON:AEP) is about to go ex-dividend in just 3 days. The ex-dividend date is usually set to be two business days 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 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. Meaning, you will need to purchase Anglo-Eastern Plantations' shares before the 16th of October to receive the dividend, which will be paid on the 7th of November.

The company's next dividend payment will be US$0.373 per share, and in the last 12 months, the company paid a total of US$0.51 per share. Looking at the last 12 months of distributions, Anglo-Eastern Plantations has a trailing yield of approximately 2.8% on its current stock price of UK£13.65. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

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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. Anglo-Eastern Plantations has a low and conservative payout ratio of just 23% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What's good is that dividends were well covered by free cash flow, with the company paying out 7.5% of its cash flow last year.

It's positive to see that Anglo-Eastern Plantations's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

View our latest analysis for Anglo-Eastern Plantations

Click here to see how much of its profit Anglo-Eastern Plantations paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Anglo-Eastern Plantations's earnings have been skyrocketing, up 41% per annum for the past five years. Anglo-Eastern Plantations looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Anglo-Eastern Plantations has delivered 27% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Should investors buy Anglo-Eastern Plantations for the upcoming dividend? It's great that Anglo-Eastern Plantations 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. Anglo-Eastern Plantations looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while Anglo-Eastern Plantations looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 1 warning sign for Anglo-Eastern Plantations that we recommend you consider before investing in the business.

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.