BIFIRE S.p.A. (BIT:FIRE) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Readers hoping to buy BIFIRE S.p.A. (BIT:FIRE) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. This means that investors who purchase BIFIRE's shares on or after the 5th of August will not receive the dividend, which will be paid on the 7th of August.

The upcoming dividend for BIFIRE is €0.0285 per share. If you buy this business for its dividend, you should have an idea of whether BIFIRE's dividend is reliable and sustainable. As a result, readers should always check whether BIFIRE has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for BIFIRE

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. BIFIRE paid out just 24% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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 that reason, it's encouraging to see BIFIRE's earnings over the past year have risen 47%. While we'd be remiss not to point out that a year is a very short time in dividend investing, it's an encouraging sign so far. BIFIRE looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

One year is not very long in the grand scheme of things though, so we wouldn't draw too strong a conclusion based on these results.

This is BIFIRE's first year of paying a regular dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.

The Bottom Line

From a dividend perspective, should investors buy or avoid BIFIRE? Companies like BIFIRE that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. We think this is a pretty attractive combination, and would be interested in investigating BIFIRE more closely.

While it's tempting to invest in BIFIRE for the dividends alone, you should always be mindful of the risks involved. For example, we've found 3 warning signs for BIFIRE (1 shouldn't be ignored!) that deserve your attention before investing in the shares.

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.

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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