Do These 3 Checks Before Buying Allcore S.p.A. (BIT:CORE) For Its Upcoming Dividend

Allcore S.p.A. (BIT:CORE) is about to trade ex-dividend in the next 4 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Allcore's shares before the 28th of October to receive the dividend, which will be paid on the 30th of October.

The company's next dividend payment will be €0.06 per share. Last year, in total, the company distributed €0.06 to shareholders. Based on the last year's worth of payments, Allcore stock has a trailing yield of around 3.6% on the current share price of €1.665. 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! So we need to investigate whether Allcore can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Allcore

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Allcore paid out 71% of its earnings to investors last year, a normal payout level for most businesses. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Allcore's earnings per share plummeted 42% over the past year,which is rarely good news for the dividend.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Allcore's dividend payments per share have declined at 23% per year on average over the past two years, which is uninspiring. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

To Sum It Up

Is Allcore an attractive dividend stock, or better left on the shelf? Allcore had an average payout ratio, but its free cash flow was lower and earnings per share have been declining. 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 Allcore despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. We've identified 5 warning signs with Allcore (at least 1 which is concerning), and understanding them should be part of your investment process.

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.