Aplisens S.A. (WSE:APN) Stock Goes Ex-Dividend In Just Three Days

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 Aplisens S.A. (WSE:APN) is about to go ex-dividend in just three days. The ex-dividend date is usually set to be two business days 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. 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, Aplisens investors that purchase the stock on or after the 9th of July will not receive the dividend, which will be paid on the 7th of August.

The company's next dividend payment will be zł0.70 per share. Last year, in total, the company distributed zł0.70 to shareholders. Based on the last year's worth of payments, Aplisens stock has a trailing yield of around 3.7% on the current share price of zł18.95. If you buy this business for its dividend, you should have an idea of whether Aplisens's dividend is reliable and sustainable. So we need to investigate whether Aplisens can afford its dividend, and if the dividend could grow.

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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. Aplisens paid out a comfortable 44% of its profit last year. A useful secondary check can be to evaluate whether Aplisens generated enough free cash flow to afford its dividend. It paid out an unsustainably high 202% of its free cash flow as dividends over the past 12 months, which is worrying. Unless there were something in the business we're not grasping, this could signal a risk that the dividend may have to be cut in the future.

Aplisens does have a large net cash position on the balance sheet, which could fund large dividends for a time, if the company so chose. Still, smart investors know that it is better to assess dividends relative to the cash and profit generated by the business. Paying dividends out of cash on the balance sheet is not long-term sustainable.

While Aplisens's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were Aplisens to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Check out our latest analysis for Aplisens

Click here to see how much of its profit Aplisens 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. This is why it's a relief to see Aplisens earnings per share are up 6.5% per annum over the last five years. Earnings have been growing at a steady rate, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Aplisens has delivered 10% dividend growth per year on average over the past 10 years. 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

Should investors buy Aplisens for the upcoming dividend? Aplisens delivered reasonable earnings per share growth in recent times, and paid out less than half its profits and 202% of its cash flow over the last year, which is a mediocre outcome. All things considered, we are not particularly enthused about Aplisens from a dividend perspective.

If you want to look further into Aplisens, it's worth knowing the risks this business faces. To help with this, we've discovered 3 warning signs for Aplisens that you should be aware of before investing in their shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.