Be Sure To Check Out Arctic Paper S.A. (WSE:ATC) Before It Goes Ex-Dividend

It looks like Arctic Paper S.A. (WSE:ATC) is about to go ex-dividend in the next three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Arctic Paper's shares before the 11th of June to receive the dividend, which will be paid on the 18th of June.

The company's next dividend payment will be zł1.00 per share, and in the last 12 months, the company paid a total of zł1.00 per share. Calculating the last year's worth of payments shows that Arctic Paper has a trailing yield of 4.4% on the current share price of zł22.98. If you buy this business for its dividend, you should have an idea of whether Arctic Paper's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Arctic Paper

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. Arctic Paper paid out a comfortable 31% of its profit last year. A useful secondary check can be to evaluate whether Arctic Paper generated enough free cash flow to afford its dividend. It paid out 84% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's positive to see that Arctic Paper'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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Arctic Paper has grown its earnings rapidly, up 96% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Arctic Paper has delivered an average of 31% per year annual increase in its dividend, based on the past six years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Has Arctic Paper got what it takes to maintain its dividend payments? Earnings per share have grown at a nice rate in recent times and over the last year, Arctic Paper paid out less than half its earnings and a bit over half its free cash flow. Arctic Paper looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Arctic Paper has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for Arctic Paper that you should be aware of before investing in their shares.

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.