Just Four Days Till Pollard Banknote Limited (TSE:PBL) Will Be Trading Ex-Dividend
Pollard Banknote Limited (TSE:PBL) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. This means that investors who purchase Pollard Banknote's shares on or after the 31st of December will not receive the dividend, which will be paid on the 15th of January.
The company's next dividend payment will be CA$0.05 per share. Last year, in total, the company distributed CA$0.20 to shareholders. Calculating the last year's worth of payments shows that Pollard Banknote has a trailing yield of 1.0% on the current share price of CA$19.67. If you buy this business for its dividend, you should have an idea of whether Pollard Banknote's dividend is reliable and sustainable. As a result, readers should always check whether Pollard Banknote has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Pollard Banknote has a low and conservative payout ratio of just 19% of its income after tax. A useful secondary check can be to evaluate whether Pollard Banknote generated enough free cash flow to afford its dividend. Dividends consumed 57% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
See our latest analysis for Pollard Banknote
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. With that in mind, we're encouraged by the steady growth at Pollard Banknote, with earnings per share up 4.0% on average over the last five years. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Pollard Banknote has lifted its dividend by approximately 5.2% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Final Takeaway
Is Pollard Banknote an attractive dividend stock, or better left on the shelf? Earnings per share have been growing at a steady rate, and Pollard Banknote paid out less than half its profits and more than half its free cash flow as dividends over the last year. Overall, it's hard to get excited about Pollard Banknote from a dividend perspective.
In light of that, while Pollard Banknote has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 2 warning signs for Pollard Banknote (of which 1 is a bit unpleasant!) you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top 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.