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

Readers hoping to buy Tinexta S.p.A. (BIT:TNXT) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Tinexta investors that purchase the stock on or after the 6th of June will not receive the dividend, which will be paid on the 8th of June.

The company's next dividend payment will be €0.30 per share. Last year, in total, the company distributed €0.30 to shareholders. Based on the last year's worth of payments, Tinexta stock has a trailing yield of around 1.1% on the current share price of €26.5. 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 Tinexta can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Tinexta

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. Tinexta paid out a comfortable 38% of its profit last year. A useful secondary check can be to evaluate whether Tinexta generated enough free cash flow to afford its dividend. It paid out 23% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Tinexta's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Tinexta has grown its earnings rapidly, up 21% a year for the past five years. Tinexta is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past seven years, Tinexta has increased its dividend at approximately 30% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Is Tinexta an attractive dividend stock, or better left on the shelf? It's great that Tinexta is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Tinexta looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

So while Tinexta looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Tinexta has 1 warning sign we think you should be aware of.

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.