Arvida Group Limited (NZSE:ARV) Goes Ex-Dividend Soon

By
Simply Wall St
Published
November 26, 2021
NZSE:ARV
Source: Shutterstock

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Arvida Group Limited (NZSE:ARV) is about to trade ex-dividend in the next three 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. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Arvida Group investors that purchase the stock on or after the 30th of November will not receive the dividend, which will be paid on the 15th of December.

The company's next dividend payment will be NZ$0.025 per share, on the back of last year when the company paid a total of NZ$0.053 to shareholders. Based on the last year's worth of payments, Arvida Group has a trailing yield of 2.7% on the current stock price of NZ$1.97. If you buy this business for its dividend, you should have an idea of whether Arvida Group's dividend is reliable and sustainable. So we need to investigate whether Arvida Group can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Arvida Group

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Arvida Group has a low and conservative payout ratio of just 18% of its income after tax. A useful secondary check can be to evaluate whether Arvida Group generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 17% of its cash flow last year.

It's positive to see that Arvida Group'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.

historic-dividend
NZSE:ARV Historic Dividend November 26th 2021

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Arvida Group's earnings per share have plummeted approximately 100% a year over the previous five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past six years, Arvida Group has increased its dividend at approximately 32% a year on average.

Final Takeaway

Should investors buy Arvida Group for the upcoming dividend? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. To summarise, Arvida Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.

On that note, you'll want to research what risks Arvida Group is facing. Every company has risks, and we've spotted 3 warning signs for Arvida Group (of which 1 is a bit concerning!) you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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