Four Days Left To Buy ATC CARGO S.A. (WSE:ATA) Before The Ex-Dividend Date

ATC CARGO S.A. (WSE:ATA) stock is about to trade ex-dividend in four days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase ATC CARGO's shares on or after the 14th of July, you won't be eligible to receive the dividend, when it is paid on the 21st of July.

The company's upcoming dividend is zł2.00 a share, following on from the last 12 months, when the company distributed a total of zł0.85 per share to shareholders. Looking at the last 12 months of distributions, ATC CARGO has a trailing yield of approximately 4.7% on its current stock price of zł18.10. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether ATC CARGO can afford its dividend, and if the dividend could grow.

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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. That's why it's good to see ATC CARGO paying out a modest 39% of its earnings. A useful secondary check can be to evaluate whether ATC CARGO generated enough free cash flow to afford its dividend. Fortunately, it paid out only 37% of its free cash flow in the past year.

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.

Check out our latest analysis for ATC CARGO

Click here to see how much of its profit ATC CARGO paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's not ideal to see ATC CARGO's earnings per share have been shrinking at 4.2% a year over the previous five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. ATC CARGO has delivered an average of 17% per year annual increase in its dividend, based on the past four years of dividend payments.

Final Takeaway

Is ATC CARGO an attractive dividend stock, or better left on the shelf? ATC CARGO has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. To summarise, ATC CARGO looks okay on this analysis, although it doesn't appear a stand-out opportunity.

In light of that, while ATC CARGO has an appealing dividend, it's worth knowing the risks involved with this stock. To that end, you should learn about the 3 warning signs we've spotted with ATC CARGO (including 1 which is potentially serious).

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.