Altri, S.G.P.S., S.A. (ELI:ALTR) stock is about to trade ex-dividend in 1 days time. Investors can purchase shares before the 13th of May in order to be eligible for this dividend, which will be paid on the 15th of May.
Altri S.G.P.S's next dividend payment will be €0.30 per share. Last year, in total, the company distributed €0.30 to shareholders. Based on the last year's worth of payments, Altri S.G.P.S stock has a trailing yield of around 6.3% on the current share price of €4.73. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Altri S.G.P.S has been able to grow its dividends, or if the dividend might be cut.
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. Altri S.G.P.S is paying out an acceptable 61% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Altri S.G.P.S generated enough free cash flow to afford its dividend. Altri S.G.P.S paid out more free cash flow than it generated - 136%, to be precise - last year, which we think is concerningly high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.
Altri S.G.P.S paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were Altri S.G.P.S to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Altri S.G.P.S has grown its earnings rapidly, up 22% 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. Altri S.G.P.S has delivered 35% dividend growth per year on average over the past nine years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Is Altri S.G.P.S worth buying for its dividend? Earnings per share growth is a positive, and the company's payout ratio looks normal. However, we note Altri S.G.P.S paid out a much higher percentage of its free cash flow, which makes us uncomfortable. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
If you're not too concerned about Altri S.G.P.S's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For instance, we've identified 5 warning signs for Altri S.G.P.S (1 is a bit concerning) you should be aware of.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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