Synektik Spólka Akcyjna (WSE:SNT) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Synektik Spólka Akcyjna (WSE:SNT) is about to go ex-dividend in the next three days. This means that investors who purchase shares on or after the 17th of February will not receive the dividend, which will be paid on the 26th of February.

Synektik Spólka Akcyjna's next dividend payment will be zł0.45 per share, which looks like a nice increase on last year, when the company distributed a total of zł0.36 to shareholders. 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! So we need to investigate whether Synektik Spólka Akcyjna can afford its dividend, and if the dividend could grow.

View our latest analysis for Synektik Spólka Akcyjna

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Synektik Spólka Akcyjna paid out a comfortable 35% of its profit last year. A useful secondary check can be to evaluate whether Synektik Spólka Akcyjna generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 35% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Synektik Spólka Akcyjna'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 how much of its profit Synektik Spólka Akcyjna 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Synektik Spólka Akcyjna's earnings have been skyrocketing, up 41% per annum for the past five years. Synektik Spólka Akcyjna is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Unfortunately Synektik Spólka Akcyjna has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

From a dividend perspective, should investors buy or avoid Synektik Spólka Akcyjna? Synektik Spólka Akcyjna has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 1 warning sign with Synektik Spólka Akcyjna and understanding them should be part of your investment process.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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