It Might Not Be A Great Idea To Buy Gielda Papierów Wartosciowych w Warszawie S.A. (WSE:GPW) For Its Next Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Gielda Papierów Wartosciowych w Warszawie S.A. (WSE:GPW) is about to trade ex-dividend in the next four 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 as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Gielda Papierów Wartosciowych w Warszawie's shares before the 21st of July in order to receive the dividend, which the company will pay on the 7th of August.

The company's upcoming dividend is zł2.70 a share, following on from the last 12 months, when the company distributed a total of zł2.70 per share to shareholders. Last year's total dividend payments show that Gielda Papierów Wartosciowych w Warszawie has a trailing yield of 6.8% on the current share price of PLN39.42. 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 Gielda Papierów Wartosciowych w Warszawie has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Gielda Papierów Wartosciowych w Warszawie

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 85% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. We'd be concerned if earnings began to decline.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. So we're not too excited that Gielda Papierów Wartosciowych w Warszawie's earnings are down 3.4% a year over 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, Gielda Papierów Wartosciowych w Warszawie has lifted its dividend by approximately 13% a year on average. The only way to pay higher dividends when earnings are shrinking is either to pay out a larger percentage of profits, spend cash from the balance sheet, or borrow the money. Gielda Papierów Wartosciowych w Warszawie is already paying out 85% of its profits, and with shrinking earnings we think it's unlikely that this dividend will grow quickly in the future.

Final Takeaway

Is Gielda Papierów Wartosciowych w Warszawie an attractive dividend stock, or better left on the shelf? We're not overly enthused to see Gielda Papierów Wartosciowych w Warszawie's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

So if you're still interested in Gielda Papierów Wartosciowych w Warszawie despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. For example, we've found 1 warning sign for Gielda Papierów Wartosciowych w Warszawie that we recommend you consider before investing in the business.

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.