Read This Before Considering ATM Grupa S.A. (WSE:ATG) For Its Upcoming zł0.08 Dividend

ATM Grupa S.A. (WSE:ATG) stock is about to trade ex-dividend in three days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Therefore, if you purchase ATM Grupa's shares on or after the 13th of December, you won't be eligible to receive the dividend, when it is paid on the 21st of December.

The company's next dividend payment will be zł0.08 per share. Last year, in total, the company distributed zł0.24 to shareholders. Looking at the last 12 months of distributions, ATM Grupa has a trailing yield of approximately 6.6% on its current stock price of PLN3.62. If you buy this business for its dividend, you should have an idea of whether ATM Grupa's dividend is reliable and sustainable. As a result, readers should always check whether ATM Grupa has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for ATM Grupa

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. ATM Grupa paid out 58% of its earnings to investors last year, a normal payout level for most businesses. 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. Over the last year it paid out 51% of its free cash flow as dividends, within the usual range for most companies.

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 ATM Grupa 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. With that in mind, we're encouraged by the steady growth at ATM Grupa, with earnings per share up 4.5% on average over the last five years. Earnings growth has been slim and the company is paying out more than half of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, ATM Grupa has increased its dividend at approximately 28% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Is ATM Grupa worth buying for its dividend? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

If you want to look further into ATM Grupa, it's worth knowing the risks this business faces. Our analysis shows 2 warning signs for ATM Grupa and you should be aware of them before buying any 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.

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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.