We Wouldn't Be Too Quick To Buy Athens Water Supply and Sewerage Company S.A. (ATH:EYDAP) Before It Goes Ex-Dividend

Athens Water Supply and Sewerage Company S.A. (ATH:EYDAP) is about to trade ex-dividend in the next 4 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Athens Water Supply and Sewerage investors that purchase the stock on or after the 22nd of July will not receive the dividend, which will be paid on the 29th of July.

The company's next dividend payment will be €0.10 per share. Last year, in total, the company distributed €0.10 to shareholders. Calculating the last year's worth of payments shows that Athens Water Supply and Sewerage has a trailing yield of 1.7% on the current share price of €5.80. If you buy this business for its dividend, you should have an idea of whether Athens Water Supply and Sewerage's dividend is reliable and sustainable. As a result, readers should always check whether Athens Water Supply and Sewerage has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Athens Water Supply and Sewerage

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Athens Water Supply and Sewerage paid out more than half (53%) of its earnings last year, which is a regular payout ratio for most companies. 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.

Click here to see how much of its profit Athens Water Supply and Sewerage paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Readers will understand then, why we're concerned to see Athens Water Supply and Sewerage's earnings per share have dropped 16% a year over 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. Athens Water Supply and Sewerage has seen its dividend decline 12% per annum on average over the past 10 years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

To Sum It Up

Is Athens Water Supply and Sewerage worth buying for its dividend? It's definitely not great to see earnings per share shrinking. The company paid out an acceptable percentage of its income, but an uncomfortably high percentage of its cash flow over the past year. It's not the most attractive proposition from a dividend perspective, and we'd probably give this one a miss for now.

So if you're still interested in Athens Water Supply and Sewerage despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. To help with this, we've discovered 1 warning sign for Athens Water Supply and Sewerage that you should be aware of before investing in their 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