Why You Might Be Interested In P.A. Nova S.A. (WSE:NVA) For Its Upcoming Dividend

P.A. Nova S.A. (WSE:NVA) is about to trade ex-dividend in the next 3 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase P.A. Nova's shares on or after the 11th of September, you won't be eligible to receive the dividend, when it is paid on the 11th of December.

The company's upcoming dividend is zł0.65 a share, following on from the last 12 months, when the company distributed a total of zł0.65 per share to shareholders. Calculating the last year's worth of payments shows that P.A. Nova has a trailing yield of 4.3% on the current share price of PLN15. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether P.A. Nova has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for P.A. Nova

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. P.A. Nova has a low and conservative payout ratio of just 18% of its income after tax.

Click here to see how much of its profit P.A. Nova paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see P.A. Nova's earnings per share have risen 13% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, P.A. Nova has lifted its dividend by approximately 2.7% a year on average. Earnings per share have been growing much quicker than dividends, potentially because P.A. Nova is keeping back more of its profits to grow the business.

The Bottom Line

Should investors buy P.A. Nova for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, P.A. Nova appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while P.A. Nova looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 3 warning signs for P.A. Nova (of which 1 doesn't sit too well with us!) you should know about.

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.