Should Income Investors Look At Automatyka-Pomiary-Sterowanie S.A. (WSE:APS) Before Its Ex-Dividend?

Readers hoping to buy Automatyka-Pomiary-Sterowanie S.A. (WSE:APS) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Accordingly, Automatyka-Pomiary-Sterowanie investors that purchase the stock on or after the 9th of August will not receive the dividend, which will be paid on the 21st of August.

The company's next dividend payment will be zł0.30 per share, and in the last 12 months, the company paid a total of zł0.38 per share. Based on the last year's worth of payments, Automatyka-Pomiary-Sterowanie stock has a trailing yield of around 8.1% on the current share price of zł4.72. 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! We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Automatyka-Pomiary-Sterowanie

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Automatyka-Pomiary-Sterowanie paid out 91% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. 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. Over the last year it paid out 71% of its free cash flow as dividends, within the usual range for most companies.

It's good to see that while Automatyka-Pomiary-Sterowanie's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.

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?

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 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 99% 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. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

From a dividend perspective, should investors buy or avoid Automatyka-Pomiary-Sterowanie? Automatyka-Pomiary-Sterowanie has been growing its earnings per share nicely, although judging by the difference between its profit and cashflow payout ratios, the company might have reported some write-offs over the last year. In summary, it's hard to get excited about Automatyka-Pomiary-Sterowanie from a dividend perspective.

With that being said, if dividends aren't your biggest concern with Automatyka-Pomiary-Sterowanie, you should know about the other risks facing this business. We've identified 3 warning signs with Automatyka-Pomiary-Sterowanie (at least 1 which is a bit unpleasant), and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com