Here's What We Like About Makarony Polskie's (WSE:MAK) Upcoming Dividend
Makarony Polskie S.A. (WSE:MAK) stock is about to trade ex-dividend in three days. The ex-dividend date is commonly two business days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase Makarony Polskie's shares on or after the 14th of July, you won't be eligible to receive the dividend, when it is paid on the 30th of July.
The company's next dividend payment will be zł0.75 per share, on the back of last year when the company paid a total of zł0.75 to shareholders. Calculating the last year's worth of payments shows that Makarony Polskie has a trailing yield of 2.8% on the current share price of zł26.70. 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 Makarony Polskie has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Makarony Polskie paid out a comfortable 34% of its profit last year. A useful secondary check can be to evaluate whether Makarony Polskie generated enough free cash flow to afford its dividend. It paid out more than half (57%) of its free cash flow in the past year, which is within an average range for most companies.
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.
View our latest analysis for Makarony Polskie
Click here to see how much of its profit Makarony Polskie paid out over the last 12 months.
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Makarony Polskie's earnings per share have risen 18% per annum over the last five years. Makarony Polskie has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Makarony Polskie has lifted its dividend by approximately 7.9% 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.
The Bottom Line
Should investors buy Makarony Polskie for the upcoming dividend? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. Makarony Polskie looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
While it's tempting to invest in Makarony Polskie for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 3 warning signs for Makarony Polskie that you should be aware of before investing in their shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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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.