XBS PRO-LOG S.A. (WSE:XBS) Stock Goes Ex-Dividend In Just Three Days

It looks like XBS PRO-LOG S.A. (WSE:XBS) is about to go ex-dividend in the next three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase XBS PRO-LOG's shares before the 3rd of December to receive the dividend, which will be paid on the 10th of December.

The company's upcoming dividend is zł7.20 a share, following on from the last 12 months, when the company distributed a total of zł8.20 per share to shareholders. Last year's total dividend payments show that XBS PRO-LOG has a trailing yield of 8.9% on the current share price of zł92.00. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Its dividend payout ratio is 90% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline. A useful secondary check can be to evaluate whether XBS PRO-LOG generated enough free cash flow to afford its dividend. XBS PRO-LOG paid out more free cash flow than it generated - 115%, to be precise - last year, which we think is concerningly high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

While XBS PRO-LOG'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 XBS PRO-LOG to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

Check out our latest analysis for XBS PRO-LOG

Click here to see how much of its profit XBS PRO-LOG 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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see XBS PRO-LOG has grown its earnings rapidly, up 21% a year for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past six years, XBS PRO-LOG has increased its dividend at approximately 24% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Has XBS PRO-LOG got what it takes to maintain its dividend payments? Earnings per share growth is a positive, and the company's payout ratio looks normal. However, we note XBS PRO-LOG paid out a much higher percentage of its free cash flow, which makes us uncomfortable. Overall, it's hard to get excited about XBS PRO-LOG from a dividend perspective.

If you're not too concerned about XBS PRO-LOG's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Be aware that XBS PRO-LOG is showing 3 warning signs in our investment analysis, and 1 of those can't be ignored...

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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.