Automatyka-Pomiary-Sterowanie S.A. (WSE:APS) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Automatyka-Pomiary-Sterowanie S.A. (WSE:APS) is about to trade ex-dividend in the next three days. The ex-dividend date is commonly two business days 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 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. In other words, investors can purchase Automatyka-Pomiary-Sterowanie's shares before the 8th of July in order to be eligible for the dividend, which will be paid on the 16th of July.

The company's upcoming dividend is zł0.38 a share, following on from the last 12 months, when the company distributed a total of zł0.38 per share to shareholders. Based on the last year's worth of payments, Automatyka-Pomiary-Sterowanie has a trailing yield of 3.7% on the current stock price of zł10.30. 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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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. Automatyka-Pomiary-Sterowanie paid out a comfortable 25% of its profit last year. A useful secondary check can be to evaluate whether Automatyka-Pomiary-Sterowanie generated enough free cash flow to afford its dividend. It paid out more than half (58%) of its free cash flow in the past year, which is within an average range for most companies.

It's positive to see that Automatyka-Pomiary-Sterowanie'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.

View our latest analysis for Automatyka-Pomiary-Sterowanie

Click here to see how much of its profit Automatyka-Pomiary-Sterowanie paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Automatyka-Pomiary-Sterowanie's earnings have been skyrocketing, up 31% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, Automatyka-Pomiary-Sterowanie has lifted its dividend by approximately 5.6% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Automatyka-Pomiary-Sterowanie is keeping back more of its profits to grow the business.

The Bottom Line

Has Automatyka-Pomiary-Sterowanie got what it takes to maintain its dividend payments? Earnings per share have grown at a nice rate in recent times and over the last year, Automatyka-Pomiary-Sterowanie paid out less than half its earnings and a bit over half its free cash flow. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in Automatyka-Pomiary-Sterowanie for the dividends alone, you should always be mindful of the risks involved. We've identified 4 warning signs with Automatyka-Pomiary-Sterowanie (at least 1 which is potentially serious), and understanding these should be part of your investment process.

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.