Is It Smart To Buy Arctic Stream S.A. (BVB:AST) Before It Goes Ex-Dividend?

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 Arctic Stream S.A. (BVB:AST) is about to go ex-dividend in just 3 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. 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 Arctic Stream's shares before the 28th of May in order to be eligible for the dividend, which will be paid on the 11th of June.

The company's upcoming dividend is RON01.40 a share, following on from the last 12 months, when the company distributed a total of RON1.20 per share to shareholders. Looking at the last 12 months of distributions, Arctic Stream has a trailing yield of approximately 6.0% on its current stock price of RON020.00. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are 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. Arctic Stream paid out 54% of its earnings to investors last year, a normal payout level for most businesses.

Check out our latest analysis for Arctic Stream

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

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time.

Given that Arctic Stream has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Final Takeaway

Should investors buy Arctic Stream for the upcoming dividend? Arctic Stream has been struggling to generate growth while also paying out more than half of its earnings to shareholders as dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

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

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.