Three Days Left To Buy Auto Hrvatska d.d. (ZGSE:AUHR) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Auto Hrvatska d.d. (ZGSE:AUHR) is about to trade ex-dividend in the next three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. In other words, investors can purchase Auto Hrvatska d.d's shares before the 8th of May in order to be eligible for the dividend, which will be paid on the 23rd of May.

The company's next dividend payment will be €8.00 per share. Last year, in total, the company distributed €8.00 to shareholders. Based on the last year's worth of payments, Auto Hrvatska d.d stock has a trailing yield of around 3.6% on the current share price of €220.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

We check all companies for important risks. See what we found for Auto Hrvatska d.d in our free report.

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. Fortunately Auto Hrvatska d.d's payout ratio is modest, at just 37% of profit. 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. It paid out more than half (74%) of its free cash flow in the past year, which is within an average range for most companies.

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.

Check out our latest analysis for Auto Hrvatska d.d

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?

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. From this perspective it's somewhat discouraging that earnings per share are down 3.5% but we'd note that investment in future growth can cause a similar impact.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Auto Hrvatska d.d has delivered 23% dividend growth per year on average over the past two years.

To Sum It Up

Is Auto Hrvatska d.d an attractive dividend stock, or better left on the shelf? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

Want to learn more about Auto Hrvatska d.d's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.