Hellenic Exchanges - Athens Stock Exchange S.A. (ATH:EXAE) Passed Our Checks, And It's About To Pay A €0.2503633 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Hellenic Exchanges - Athens Stock Exchange S.A. (ATH:EXAE) is about to trade ex-dividend in the next 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 Hellenic Exchanges - Athens Stock Exchange's shares before the 25th of June to receive the dividend, which will be paid on the 1st of July.

The company's next dividend payment will be €0.2503633 per share. Last year, in total, the company distributed €0.16 to shareholders. Based on the last year's worth of payments, Hellenic Exchanges - Athens Stock Exchange stock has a trailing yield of around 3.1% on the current share price of €5.02. 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! We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Hellenic Exchanges - Athens Stock Exchange

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. It paid out 82% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be worried about the risk of a drop in earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

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. It's encouraging to see Hellenic Exchanges - Athens Stock Exchange has grown its earnings rapidly, up 30% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Hellenic Exchanges - Athens Stock Exchange has delivered an average of 2.7% per year annual increase in its dividend, based on the past 10 years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Hellenic Exchanges - Athens Stock Exchange is keeping back more of its profits to grow the business.

Final Takeaway

From a dividend perspective, should investors buy or avoid Hellenic Exchanges - Athens Stock Exchange? Earnings per share are growing at an attractive rate, and Hellenic Exchanges - Athens Stock Exchange is paying out a bit over half its profits. In summary, Hellenic Exchanges - Athens Stock Exchange appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while Hellenic Exchanges - Athens Stock Exchange looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with Hellenic Exchanges - Athens Stock Exchange and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com