Acsion Limited (JSE:ACS) Looks Interesting, And It's About To Pay A Dividend
Acsion Limited (JSE:ACS) stock is about to trade ex-dividend in four days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Acsion's shares before the 12th of August in order to receive the dividend, which the company will pay on the 17th of August.
The company's next dividend payment will be R00.24 per share, and in the last 12 months, the company paid a total of R0.44 per share. Looking at the last 12 months of distributions, Acsion has a trailing yield of approximately 4.3% on its current stock price of R011.10. If you buy this business for its dividend, you should have an idea of whether Acsion's dividend is reliable and sustainable. So we need to investigate whether Acsion can afford its dividend, and if the dividend could grow.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Acsion has a low and conservative payout ratio of just 16% of its income after tax. A useful secondary check can be to evaluate whether Acsion generated enough free cash flow to afford its dividend. Luckily it paid out just 19% of its free cash flow last year.
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 Acsion
Click here to see how much of its profit Acsion paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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 Acsion has grown its earnings rapidly, up 116% a year for the past five years. Acsion earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Acsion has delivered 16% dividend growth per year on average over the past nine years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
The Bottom Line
Should investors buy Acsion for the upcoming dividend? It's great that Acsion is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Acsion looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
In light of that, while Acsion has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 4 warning signs for Acsion 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.