Do These 3 Checks Before Buying PPC Ltd (JSE:PPC) For Its Upcoming Dividend

It looks like PPC Ltd (JSE:PPC) is about to go ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase PPC's shares before the 18th of September to receive the dividend, which will be paid on the 23rd of September.

The company's upcoming dividend is R00.335 a share, following on from the last 12 months, when the company distributed a total of R0.14 per share to shareholders. Based on the last year's worth of payments, PPC stock has a trailing yield of around 3.5% on the current share price of R03.95. If you buy this business for its dividend, you should have an idea of whether PPC's dividend is reliable and sustainable. As a result, readers should always check whether PPC has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for PPC

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. PPC reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. PPC was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. PPC has seen its dividend decline 22% per annum on average over the past 10 years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Get our latest analysis on PPC's balance sheet health here.

To Sum It Up

From a dividend perspective, should investors buy or avoid PPC? These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Although, if you're still interested in PPC and want to know more, you'll find it very useful to know what risks this stock faces. To help with this, we've discovered 1 warning sign for PPC 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.