Is It Worth Considering Industrie Chimiche Forestali S.p.A. (BIT:ICF) For Its Upcoming Dividend?

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Industrie Chimiche Forestali S.p.A. (BIT:ICF) is about to go ex-dividend in just 3 days. Typically, the ex-dividend date is one business day 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 two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Industrie Chimiche Forestali's shares before the 13th of May in order to receive the dividend, which the company will pay on the 15th of May.

The company's next dividend payment will be €0.20 per share. Last year, in total, the company distributed €0.20 to shareholders. Based on the last year's worth of payments, Industrie Chimiche Forestali stock has a trailing yield of around 3.9% on the current share price of €5.15. If you buy this business for its dividend, you should have an idea of whether Industrie Chimiche Forestali's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Industrie Chimiche Forestali

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. Industrie Chimiche Forestali is paying out an acceptable 63% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Industrie Chimiche Forestali generated enough free cash flow to afford its dividend. It distributed 38% of its free cash flow as dividends, a comfortable payout level 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.

Click here to see how much of its profit Industrie Chimiche Forestali paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Industrie Chimiche Forestali's earnings per share have plummeted approximately 32% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, three years ago, Industrie Chimiche Forestali has lifted its dividend by approximately 13% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.

The Bottom Line

Should investors buy Industrie Chimiche Forestali for the upcoming dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

So if you want to do more digging on Industrie Chimiche Forestali, you'll find it worthwhile knowing the risks that this stock faces. To help with this, we've discovered 2 warning signs for Industrie Chimiche Forestali that you should be aware of before investing in their shares.

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.