Here's What We Like About Ifirma's (WSE:IFI) 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 Ifirma SA (WSE:IFI) is about to go ex-dividend in just 3 days. This means that investors who purchase shares on or after the 3rd of March will not receive the dividend, which will be paid on the 11th of March.

Ifirma's upcoming dividend is zł0.05 a share, following on from the last 12 months, when the company distributed a total of zł0.16 per share to shareholders. Last year's total dividend payments show that Ifirma has a trailing yield of 2.2% on the current share price of PLN7.2. 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! So we need to investigate whether Ifirma can afford its dividend, and if the dividend could grow.

View our latest analysis for Ifirma

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. Ifirma paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.

Click here to see how much of its profit Ifirma 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Ifirma has grown its earnings rapidly, up 44% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Ifirma could have strong prospects for future increases to the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past nine years, Ifirma has increased its dividend at approximately 9.6% 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.

To Sum It Up

From a dividend perspective, should investors buy or avoid Ifirma? Earnings per share are growing at an attractive rate, and Ifirma is paying out a bit over half its profits. Overall, Ifirma looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

On that note, you'll want to research what risks Ifirma is facing. To help with this, we've discovered 3 warning signs for Ifirma that you should be aware of before investing in their shares.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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