Only Three Days Left To Cash In On Quartix Technologies' (LON:QTX) Dividend

It looks like Quartix Technologies plc (LON:QTX) is about to go ex-dividend in the next 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Quartix Technologies' shares before the 28th of August in order to be eligible for the dividend, which will be paid on the 30th of September.

The company's next dividend payment will be UK£0.025 per share, on the back of last year when the company paid a total of UK£0.06 to shareholders. Calculating the last year's worth of payments shows that Quartix Technologies has a trailing yield of 2.3% on the current share price of UK£2.66. If you buy this business for its dividend, you should have an idea of whether Quartix Technologies's dividend is reliable and sustainable. So we need to investigate whether Quartix Technologies can afford its dividend, and if the dividend could grow.

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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. Quartix Technologies is paying out an acceptable 51% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Quartix Technologies generated enough free cash flow to afford its dividend. It paid out more than half (52%) of its free cash flow in the past year, which is within an average range for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

View our latest analysis for Quartix Technologies

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Quartix Technologies's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

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, Quartix Technologies has lifted its dividend by approximately 7.2% a year on average.

The Bottom Line

Is Quartix Technologies an attractive dividend stock, or better left on the shelf? While earnings per share are flat, at least Quartix Technologies has not committed itself to an unsustainable dividend, with its earnings and cashflow payout ratios within reasonable bounds. It's not that we think Quartix Technologies is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Quartix Technologies. Every company has risks, and we've spotted 1 warning sign for Quartix Technologies you should know about.

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.