Kino Polska TV Spolka Akcyjna (WSE:KPL) Could Be A Buy For Its Upcoming Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Kino Polska TV Spolka Akcyjna (WSE:KPL) is about to go ex-dividend in just 3 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. 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, Kino Polska TV Spolka Akcyjna investors that purchase the stock on or after the 22nd of August will not receive the dividend, which will be paid on the 30th of August.

The company's upcoming dividend is zł0.63 a share, following on from the last 12 months, when the company distributed a total of zł0.63 per share to shareholders. Based on the last year's worth of payments, Kino Polska TV Spolka Akcyjna stock has a trailing yield of around 3.5% on the current share price of zł18.20. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Kino Polska TV Spolka Akcyjna

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Kino Polska TV Spolka Akcyjna is paying out just 22% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 17% 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 how much of its profit Kino Polska TV Spolka Akcyjna paid out over the last 12 months.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at Kino Polska TV Spolka Akcyjna, with earnings per share up 9.4% on average over the last five years. Earnings per share have been increasing steadily and management is reinvesting almost all of the profits back into the business. If profits are reinvested effectively, this could be a bullish combination for future earnings and dividends.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Kino Polska TV Spolka Akcyjna has lifted its dividend by approximately 3.4% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is Kino Polska TV Spolka Akcyjna an attractive dividend stock, or better left on the shelf? Earnings per share growth has been growing somewhat, and Kino Polska TV Spolka Akcyjna is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Kino Polska TV Spolka Akcyjna is halfway there. There's a lot to like about Kino Polska TV Spolka Akcyjna, and we would prioritise taking a closer look at it.

So while Kino Polska TV Spolka Akcyjna looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Every company has risks, and we've spotted 3 warning signs for Kino Polska TV Spolka Akcyjna you should know about.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.