Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Petros Petropoulos AEVE (ATH:PETRO) is about to trade ex-dividend in the next three days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. 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. In other words, investors can purchase Petros Petropoulos AEVE's shares before the 20th of July in order to be eligible for the dividend, which will be paid on the 27th of July.
The company's next dividend payment will be €0.35 per share. Last year, in total, the company distributed €0.30 to shareholders. Looking at the last 12 months of distributions, Petros Petropoulos AEVE has a trailing yield of approximately 3.8% on its current stock price of €7.98. 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 Petros Petropoulos AEVE 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. Petros Petropoulos AEVE paid out just 22% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Petros Petropoulos AEVE paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.
Check out our latest analysis for Petros Petropoulos AEVE
Click here to see how much of its profit Petros Petropoulos AEVE paid out over the last 12 months.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, Petros Petropoulos AEVE's earnings per share have been growing at 19% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Petros Petropoulos AEVE has delivered 20% dividend growth per year on average over the past six years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
The Bottom Line
Has Petros Petropoulos AEVE got what it takes to maintain its dividend payments? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. In summary, while it has some positive characteristics, we're not inclined to race out and buy Petros Petropoulos AEVE today.
In light of that, while Petros Petropoulos AEVE has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 4 warning signs for Petros Petropoulos AEVE (2 can't be ignored!) that deserve your attention before investing in the 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.