It Might Not Be A Great Idea To Buy Elvalhalcor Hellenic Copper and Aluminium Industry S.A. (ATH:ELHA) For Its Next Dividend

Elvalhalcor Hellenic Copper and Aluminium Industry S.A. (ATH:ELHA) stock is about to trade ex-dividend in three days. The ex-dividend date occurs one day 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 as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Elvalhalcor Hellenic Copper and Aluminium Industry's shares on or after the 25th of June, you won't be eligible to receive the dividend, when it is paid on the 1st of July.

The company's next dividend payment will be €0.04 per share. Last year, in total, the company distributed €0.04 to shareholders. Based on the last year's worth of payments, Elvalhalcor Hellenic Copper and Aluminium Industry has a trailing yield of 2.2% on the current stock price of €1.824. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Elvalhalcor Hellenic Copper and Aluminium Industry

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. Elvalhalcor Hellenic Copper and Aluminium Industry paid out 53% of its earnings to investors last year, a normal payout level for most businesses.

Click here to see how much of its profit Elvalhalcor Hellenic Copper and Aluminium Industry paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're discomforted by Elvalhalcor Hellenic Copper and Aluminium Industry's 19% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Elvalhalcor Hellenic Copper and Aluminium Industry has delivered 5.9% dividend growth per year on average over the past five years. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.

To Sum It Up

Is Elvalhalcor Hellenic Copper and Aluminium Industry an attractive dividend stock, or better left on the shelf? Earnings per share have been declining and the company is paying out more than half its profits to shareholders; not an enticing combination. We're unconvinced on the company's merits, and think there might be better opportunities out there.

If you're not too concerned about Elvalhalcor Hellenic Copper and Aluminium Industry's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, we've found 3 warning signs for Elvalhalcor Hellenic Copper and Aluminium Industry (1 shouldn't be ignored!) that deserve your attention before investing in the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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