Interested In First Capital's (BIT:FIC) Upcoming €1.00 Dividend? You Have Three Days Left

First Capital S.p.A. (BIT:FIC) is about to trade ex-dividend in the next 3 days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order 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. In other words, investors can purchase First Capital's shares before the 15th of December in order to be eligible for the dividend, which will be paid on the 17th of December.

The company's next dividend payment will be €1.00 per share, and in the last 12 months, the company paid a total of €0.34 per share. Looking at the last 12 months of distributions, First Capital has a trailing yield of approximately 1.6% on its current stock price of €22.00. If you buy this business for its dividend, you should have an idea of whether First Capital's dividend is reliable and sustainable. As a result, readers should always check whether First Capital has been able to grow its dividends, or if the dividend might be cut.

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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. First Capital is paying out just 8.5% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. First Capital paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

See our latest analysis for First Capital

Click here to see how much of its profit First Capital paid out over the last 12 months.

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. So we're not too excited that First Capital's earnings are down 3.4% a year over the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the First Capital dividends are largely the same as they were 10 years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.

The Bottom Line

Has First Capital got what it takes to maintain its dividend payments? First Capital's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

If you want to look further into First Capital, it's worth knowing the risks this business faces. Our analysis shows 2 warning signs for First Capital and you should be aware of them before buying any 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.