Is It Worth Considering LiveChat Software S.A. (WSE:LVC) For Its Upcoming Dividend?

By
Simply Wall St
Published
July 14, 2021
WSE:LVC
Source: Shutterstock

It looks like LiveChat Software S.A. (WSE:LVC) is about to go ex-dividend in the next three 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 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. In other words, investors can purchase LiveChat Software's shares before the 19th of July in order to be eligible for the dividend, which will be paid on the 27th of July.

The company's next dividend payment will be zł0.89 per share. Last year, in total, the company distributed zł3.69 to shareholders. Looking at the last 12 months of distributions, LiveChat Software has a trailing yield of approximately 2.7% on its current stock price of PLN137.4. If you buy this business for its dividend, you should have an idea of whether LiveChat Software's dividend is reliable and sustainable. As a result, readers should always check whether LiveChat Software has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for LiveChat Software

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. LiveChat Software paid out 95% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. 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. Over the last year, it paid out more than three-quarters (77%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.

It's good to see that while LiveChat Software's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if the company continues paying out such a high percentage of its profits, the dividend could be at risk if business turns sour.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
WSE:LVC Historic Dividend July 15th 2021

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 earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see LiveChat Software's earnings have been skyrocketing, up 29% per annum for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last seven years, LiveChat Software has lifted its dividend by approximately 39% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

Final Takeaway

Is LiveChat Software worth buying for its dividend? Growing earnings per share and a normal cashflow payout ratio is an ok combination, but we're concerned that the company is paying out such a high percentage of its income as dividends. In summary, it's hard to get excited about LiveChat Software from a dividend perspective.

So if you want to do more digging on LiveChat Software, you'll find it worthwhile knowing the risks that this stock faces. For example - LiveChat Software has 1 warning sign we think you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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