Be Sure To Check Out Cloud Technologies S.A. (WSE:CLD) Before It Goes Ex-Dividend

Cloud Technologies S.A. (WSE:CLD) 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. 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. This means that investors who purchase Cloud Technologies' shares on or after the 20th of June will not receive the dividend, which will be paid on the 28th of June.

The company's next dividend payment will be zł1.25 per share. Last year, in total, the company distributed zł1.25 to shareholders. Based on the last year's worth of payments, Cloud Technologies stock has a trailing yield of around 1.7% on the current share price of zł73.00. If you buy this business for its dividend, you should have an idea of whether Cloud Technologies'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.

Check out our latest analysis for Cloud Technologies

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Cloud Technologies is paying out an acceptable 70% of its profit, a common payout level among most companies. 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 30% 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 Cloud Technologies 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Cloud Technologies has grown its earnings rapidly, up 58% a year for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Cloud Technologies could have strong prospects for future increases to the dividend.

Unfortunately Cloud Technologies has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Should investors buy Cloud Technologies for the upcoming dividend? We like Cloud Technologies's growing earnings per share and the fact that - while its payout ratio is around average - it paid out a lower percentage of its cash flow. Cloud Technologies looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

While it's tempting to invest in Cloud Technologies for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 2 warning signs for Cloud Technologies 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.

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