Motor Oil (Hellas) Corinth Refineries S.A. (ATH:MOH) Is About To Go Ex-Dividend, And It Pays A 4.6% Yield

Motor Oil (Hellas) Corinth Refineries S.A. (ATH:MOH) stock is about to trade ex-dividend in 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Motor Oil (Hellas) Corinth Refineries' shares before the 23rd of December in order to be eligible for the dividend, which will be paid on the 5th of January.

The company's next dividend payment will be €0.35 per share, on the back of last year when the company paid a total of €1.41 to shareholders. Calculating the last year's worth of payments shows that Motor Oil (Hellas) Corinth Refineries has a trailing yield of 4.6% on the current share price of €30.72. If you buy this business for its dividend, you should have an idea of whether Motor Oil (Hellas) Corinth Refineries's dividend is reliable and sustainable. So we need to investigate whether Motor Oil (Hellas) Corinth Refineries can afford its dividend, and if the dividend could grow.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Motor Oil (Hellas) Corinth Refineries paying out a modest 31% of its earnings. 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. Motor Oil (Hellas) Corinth Refineries paid out more free cash flow than it generated - 121%, to be precise - last year, which we think is concerningly high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

While Motor Oil (Hellas) Corinth Refineries's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Were this to happen repeatedly, this would be a risk to Motor Oil (Hellas) Corinth Refineries's ability to maintain its dividend.

Check out our latest analysis for Motor Oil (Hellas) Corinth Refineries

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

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Motor Oil (Hellas) Corinth Refineries's earnings per share have been growing at 18% a year for the past five years. Earnings have been growing at a decent rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Motor Oil (Hellas) Corinth Refineries has delivered an average of 17% per year annual increase in its dividend, based on the past 10 years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Has Motor Oil (Hellas) Corinth Refineries got what it takes to maintain its dividend payments? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. For instance, we've identified 4 warning signs for Motor Oil (Hellas) Corinth Refineries (1 is significant) 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.