Here's Why We're Wary Of Buying S.C. Mobest's (BVB:MOBE) For Its Upcoming Dividend

S.C. Mobest S.A. (BVB:MOBE) is about to trade ex-dividend in the next three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a 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. Meaning, you will need to purchase S.C. Mobest's shares before the 15th of May to receive the dividend, which will be paid on the 2nd of June.

The company's next dividend payment will be RON00.158 per share, on the back of last year when the company paid a total of RON0.13 to shareholders. Calculating the last year's worth of payments shows that S.C. Mobest has a trailing yield of 5.7% on the current share price of RON02.30. 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! We need to see whether the dividend is covered by earnings and if it's growing.

We've discovered 6 warning signs about S.C. Mobest. View them for free.

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. S.C. Mobest paid out a disturbingly high 232% of its profit as dividends last year, which makes us concerned there's something we don't fully understand in the business.

View our latest analysis for S.C. Mobest

Click here to see how much of its profit S.C. Mobest 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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see S.C. Mobest earnings per share are up 2.3% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. S.C. Mobest has seen its dividend decline 25% per annum on average over the past two years, which is not great to see. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

The Bottom Line

Is S.C. Mobest an attractive dividend stock, or better left on the shelf? While we like that its earnings are growing somewhat, we're not enamored that it's paying out 232% of last year's earnings. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Although, if you're still interested in S.C. Mobest and want to know more, you'll find it very useful to know what risks this stock faces. For example, we've found 6 warning signs for S.C. Mobest (2 shouldn't be ignored!) that deserve your attention before investing in the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.