Grupa Pracuj S.A. (WSE:GPP) Passed Our Checks, And It's About To Pay A zł2.00 Dividend

Grupa Pracuj S.A. (WSE:GPP) is about to trade ex-dividend in the next 4 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, Grupa Pracuj investors that purchase the stock on or after the 21st of June will not receive the dividend, which will be paid on the 5th of July.

The company's next dividend payment will be zł2.00 per share, and in the last 12 months, the company paid a total of zł2.00 per share. Looking at the last 12 months of distributions, Grupa Pracuj has a trailing yield of approximately 3.4% on its current stock price of zł59.50. If you buy this business for its dividend, you should have an idea of whether Grupa Pracuj's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Grupa Pracuj

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Grupa Pracuj paid out 71% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 36% of its free cash flow in the past year.

It's positive to see that Grupa Pracuj'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.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Grupa Pracuj's earnings per share have risen 12% per annum over the last five years. Grupa Pracuj is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. It looks like the Grupa Pracuj dividends are largely the same as they were two years ago.

The Bottom Line

Is Grupa Pracuj worth buying for its dividend? We like Grupa Pracuj's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. It's a promising combination that should mark this company worthy of closer attention.

While it's tempting to invest in Grupa Pracuj for the dividends alone, you should always be mindful of the risks involved. For example - Grupa Pracuj has 1 warning sign we think you should be aware of.

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