Is It Smart To Buy Flexopack Société Anonyme Commercial and Industrial Plastics Company (ATH:FLEXO) Before It Goes Ex-Dividend?

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Flexopack Société Anonyme Commercial and Industrial Plastics Company (ATH:FLEXO) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. This means that investors who purchase Flexopack Société Anonyme Commercial and Industrial Plastics' shares on or after the 2nd of July will not receive the dividend, which will be paid on the 8th of July.

The company's next dividend payment will be €0.15 per share, and in the last 12 months, the company paid a total of €0.15 per share. Last year's total dividend payments show that Flexopack Société Anonyme Commercial and Industrial Plastics has a trailing yield of 1.9% on the current share price of €8.05. If you buy this business for its dividend, you should have an idea of whether Flexopack Société Anonyme Commercial and Industrial Plastics's dividend is reliable and sustainable. So we need to investigate whether Flexopack Société Anonyme Commercial and Industrial Plastics can afford its dividend, and if the dividend could grow.

See our latest analysis for Flexopack Société Anonyme Commercial and Industrial Plastics

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. Flexopack Société Anonyme Commercial and Industrial Plastics is paying out just 12% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. 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 13% of its cash flow last year.

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.

Click here to see how much of its profit Flexopack Société Anonyme Commercial and Industrial Plastics 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Flexopack Société Anonyme Commercial and Industrial Plastics's earnings per share have risen 16% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last nine years, Flexopack Société Anonyme Commercial and Industrial Plastics has lifted its dividend by approximately 13% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Is Flexopack Société Anonyme Commercial and Industrial Plastics an attractive dividend stock, or better left on the shelf? It's great that Flexopack Société Anonyme Commercial and Industrial Plastics 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. Flexopack Société Anonyme Commercial and Industrial Plastics looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Want to learn more about Flexopack Société Anonyme Commercial and Industrial Plastics? Here's a visualisation of its historical rate of revenue and earnings growth.

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