Read This Before Considering Lucisano Media Group S.p.A. (BIT:LMG) For Its Upcoming €0.04 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Lucisano Media Group S.p.A. (BIT:LMG) is about to trade ex-dividend in the next 4 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves at least 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 Lucisano Media Group's shares before the 19th of May in order to receive the dividend, which the company will pay on the 21st of May.

The company's next dividend payment will be €0.04 per share, on the back of last year when the company paid a total of €0.04 to shareholders. Based on the last year's worth of payments, Lucisano Media Group has a trailing yield of 4.2% on the current stock price of €0.96. 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 check whether the dividend payments are covered, and if earnings are growing.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Lucisano Media Group has a low and conservative payout ratio of just 22% of its income after tax. 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. Lucisano Media Group paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.

View our latest analysis for Lucisano Media Group

Click here to see how much of its profit Lucisano Media Group paid out over the last 12 months.

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. With that in mind, we're encouraged by the steady growth at Lucisano Media Group, with earnings per share up 2.5% on average over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Lucisano Media Group's dividend payments per share have declined at 6.0% per year on average over the past nine years, which is uninspiring. Lucisano Media Group is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

From a dividend perspective, should investors buy or avoid Lucisano Media Group? Lucisano Media Group delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and -8.5% of its cash flow over the last year, which is a mediocre outcome. To summarise, Lucisano Media Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So if you want to do more digging on Lucisano Media Group, you'll find it worthwhile knowing the risks that this stock faces. For instance, we've identified 4 warning signs for Lucisano Media Group (1 is significant) you should be aware of.

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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.