Synektik Spólka Akcyjna (WSE:SNT) Passed Our Checks, And It's About To Pay A zł3.03 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Synektik Spólka Akcyjna (WSE:SNT) is about to trade ex-dividend in the next four days. 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. 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. In other words, investors can purchase Synektik Spólka Akcyjna's shares before the 1st of March in order to be eligible for the dividend, which will be paid on the 8th of March.

The company's next dividend payment will be zł3.03 per share, on the back of last year when the company paid a total of zł3.03 to shareholders. Looking at the last 12 months of distributions, Synektik Spólka Akcyjna has a trailing yield of approximately 2.6% on its current stock price of zł117.50. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. 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 usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Synektik Spólka Akcyjna's payout ratio is modest, at just 38% of profit. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 3.2% of its free cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Synektik Spólka Akcyjna has grown its earnings rapidly, up 50% a year 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. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

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, four years ago, Synektik Spólka Akcyjna has lifted its dividend by approximately 70% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

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. Synektik Spólka Akcyjna looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Synektik Spólka Akcyjna is facing. For example - Synektik Spólka Akcyjna has 1 warning sign we think you should be aware of.

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.