Income Investors Should Know That Notoria Serwis S.A. (WSE:NTS) Goes Ex-Dividend Soon

Readers hoping to buy Notoria Serwis S.A. (WSE:NTS) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Notoria Serwis' shares before the 5th of July to receive the dividend, which will be paid on the 22nd of July.

The company's next dividend payment will be zł0.22 per share. Last year, in total, the company distributed zł0.22 to shareholders. Looking at the last 12 months of distributions, Notoria Serwis has a trailing yield of approximately 4.2% on its current stock price of zł5.25. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Notoria Serwis

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Last year, Notoria Serwis paid out 95% of its income as dividends, which is above a level that we're comfortable with, especially if the company needs to reinvest in its business.

When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.

Click here to see how much of its profit Notoria Serwis 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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Notoria Serwis earnings per share are up 8.1% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Notoria Serwis's dividend payments per share have declined at 9.8% per year on average over the past three years, which is uninspiring. Notoria Serwis is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

Final Takeaway

Has Notoria Serwis got what it takes to maintain its dividend payments? Notoria Serwis has been growing earnings per share at a reasonable rate, but over the last year its dividend was not well covered by earnings. Notoria Serwis doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that being said, if you're still considering Notoria Serwis as an investment, you'll find it beneficial to know what risks this stock is facing. Case in point: We've spotted 5 warning signs for Notoria Serwis 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