Why You Might Be Interested In Lokum Deweloper S.A. (WSE:LKD) For Its Upcoming Dividend

Lokum Deweloper S.A. (WSE:LKD) is about to trade ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. In other words, investors can purchase Lokum Deweloper's shares before the 13th of August in order to be eligible for the dividend, which will be paid on the 22nd of August.

The company's next dividend payment will be zł2.40 per share. Last year, in total, the company distributed zł2.40 to shareholders. Calculating the last year's worth of payments shows that Lokum Deweloper has a trailing yield of 9.3% on the current share price of zł25.80. If you buy this business for its dividend, you should have an idea of whether Lokum Deweloper's dividend is reliable and sustainable. So we need to investigate whether Lokum Deweloper can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Lokum Deweloper

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Lokum Deweloper's payout ratio is modest, at just 29% of profit. A useful secondary check can be to evaluate whether Lokum Deweloper generated enough free cash flow to afford its dividend. It paid out 9.6% of its free cash flow as dividends last year, which is conservatively low.

It's positive to see that Lokum Deweloper'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 how much of its profit Lokum Deweloper 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Lokum Deweloper's earnings per share have risen 19% per annum over the last five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last eight years, Lokum Deweloper has lifted its dividend by approximately 18% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

The Bottom Line

Is Lokum Deweloper an attractive dividend stock, or better left on the shelf? Lokum Deweloper has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past eight years, but the conservative payout ratio makes the current dividend look sustainable. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in Lokum Deweloper for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 3 warning signs we've spotted with Lokum Deweloper (including 1 which shouldn't be ignored).

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.

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