Should Income Investors Look At Auto Hrvatska d.d. (ZGSE:AUHR) Before Its Ex-Dividend?

Auto Hrvatska d.d. (ZGSE:AUHR) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. Thus, you can purchase Auto Hrvatska d.d's shares before the 9th of May in order to receive the dividend, which the company will pay on the 24th of May.

The company's next dividend payment will be €8.00 per share, and in the last 12 months, the company paid a total of €8.00 per share. Based on the last year's worth of payments, Auto Hrvatska d.d has a trailing yield of 3.8% on the current stock price of €208.00. 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! We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Auto Hrvatska d.d

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Auto Hrvatska d.d's payout ratio is modest, at just 37% of profit. 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 Auto Hrvatska d.d paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. To our modest chagrin, Auto Hrvatska d.d earnings per share have been effectively flat over the past year. Growth is a prerequisite for an outstanding dividend company over the long term, but we wouldn't read too much into flat numbers over any one year time frame.

Unfortunately Auto Hrvatska d.d has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is Auto Hrvatska d.d worth buying for its dividend? Earnings per share have barely grown in this time, and although Auto Hrvatska d.d is paying out a low percentage of its profit, its dividend was not well covered by free cash flow. Only rarely do we find companies paying out a low percentage of their profits yet a high percentage of their cash flow, so we'd mark this as a concern. All things considered, we are not particularly enthused about Auto Hrvatska d.d from a dividend perspective.

If you're not too concerned about Auto Hrvatska d.d's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. To that end, you should learn about the 3 warning signs we've spotted with Auto Hrvatska d.d (including 1 which is a bit concerning).

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.