Thrace Plastics Holding and Commercial S.A. (ATH:PLAT) stock is about to trade ex-dividend in 3 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Thrace Plastics Holding and Commercial investors that purchase the stock on or after the 1st of December will not receive the dividend, which will be paid on the 8th of December.
The company's next dividend payment will be €0.11 per share. Last year, in total, the company distributed €0.16 to shareholders. Based on the last year's worth of payments, Thrace Plastics Holding and Commercial stock has a trailing yield of around 3.3% on the current share price of €6.67. If you buy this business for its dividend, you should have an idea of whether Thrace Plastics Holding and Commercial's dividend is reliable and sustainable. So we need to investigate whether Thrace Plastics Holding and Commercial can afford its dividend, and if the dividend could grow.
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. Thrace Plastics Holding and Commercial paid out just 15% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. The good news is it paid out just 14% of its free cash flow in the 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.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. 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's why it's comforting to see Thrace Plastics Holding and Commercial's earnings have been skyrocketing, up 52% per annum for the past five years. Thrace Plastics Holding and Commercial earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Thrace Plastics Holding and Commercial has delivered an average of 20% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Is Thrace Plastics Holding and Commercial worth buying for its dividend? It's great that Thrace Plastics Holding and Commercial 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. Thrace Plastics Holding and Commercial looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
In light of that, while Thrace Plastics Holding and Commercial has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 3 warning signs for Thrace Plastics Holding and Commercial (1 is concerning) you should be aware of.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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