Looks like Ifirma SA (WSE:IFI) is set to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day shareholders must be on the books of the company to receive a dividend. The ex-dividend date is important because each time a stock is bought or sold, the transaction takes at least two business days to settle. As a result, Ifirma investors who buy the stock on or after June 7 will not receive the dividend, which will be paid on June 15.
The company’s next dividend payment will be 0.30 zł per share, after last year when the company paid out a total of 0.57 zł to shareholders. Looking at the last 12 months of distributions, Ifirma has a yield of around 2.5% on its current share price of 22.4 PLN. Dividends are an important source of income for many shareholders, but the health of the company is essential to sustaining those dividends. That’s why we always have to check if the dividend payouts seem sustainable and if the business is growing.
See our latest analysis for Ifirma
If a company pays out more dividends than it has earned, the dividend may become unsustainable – a less than ideal situation. Fortunately, Ifirma’s payout ratio is modest, at just 49% of profits.
Click here to see how much of its profits Ifirma has paid out over the past 12 months.
Have earnings and dividends increased?
Companies with strong growth prospects are generally the best dividend payers because it is easier to increase dividends when earnings per share improve. If earnings fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. It is encouraging to see that Ifirma has grown its revenues rapidly, increasing by 32% per year over the past five years. Ifirma pays out less than half of its earnings and cash flow, while simultaneously growing earnings per share at a rapid pace. Companies with rising earnings and low payout rates are often the best long-term dividend-paying stocks because the company can both increase its earnings and increase the percentage of earnings it pays out, essentially multiplying the dividend.
Another key way to gauge a company’s dividend outlook is to measure its historical rate of dividend growth. Ifirma has recorded dividend growth of 23% per year on average over the past 10 years. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing at the same time.
To sum up
Does Ifirma have what it takes to maintain its dividend payments? When companies are growing rapidly and keeping the majority of profits within the company, it is usually a sign that reinvesting profits creates more value than paying dividends to shareholders. This strategy can add significant shareholder value over the long term – as long as it is accomplished without issuing too many new shares. Overall, Ifirma looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
On that note, you’ll want to research the risks that Ifirma faces. For example – Ifirma has 1 warning sign we think you should know.
A common investment mistake is to buy the first good stock you see. Here you can find a complete list of high yielding dividend stocks.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.