Is It Smart To Buy Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna (WSE:KPD) Before It Goes Ex-Dividend?

Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna (WSE:KPD) stock is about to trade ex-dividend in 3 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. 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. Accordingly, Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna investors that purchase the stock on or after the 20th of July will not receive the dividend, which will be paid on the 30th of August.

The company's next dividend payment will be zł4.00 per share, and in the last 12 months, the company paid a total of zł4.00 per share. Based on the last year's worth of payments, Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna has a trailing yield of 5.4% on the current stock price of PLN74.4. 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! As a result, readers should always check whether Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego 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. Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna paid out just 17% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 27% of the free cash flow it generated, which is a comfortable payout ratio.

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 how much of its profit Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna paid out over the last 12 months.

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 fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna's earnings have been skyrocketing, up 55% per annum for the past five years. Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego 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.

Given that Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Is Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna an attractive dividend stock, or better left on the shelf? Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego 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. It's a promising combination that should mark this company worthy of closer attention.

So while Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To help with this, we've discovered 2 warning signs for Koszalinskie Przedsiebiorstwo Przemyslu Drzewnego Spólka Akcyjna that you should be aware of before investing in their shares.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.