Adtraction Group AB (STO:ADTR) is about to trade ex-dividend in the next 4 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase Adtraction Group's shares on or after the 26th of October will not receive the dividend, which will be paid on the 30th of October.
The company's next dividend payment will be kr01.10 per share, and in the last 12 months, the company paid a total of kr2.20 per share. Based on the last year's worth of payments, Adtraction Group stock has a trailing yield of around 5.5% on the current share price of kr039.70. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Adtraction Group can afford its dividend, and if the dividend could grow.
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. Adtraction Group reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If Adtraction Group didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Over the last year it paid out 54% of its free cash flow as dividends, within the usual range for most companies.
View our latest analysis for Adtraction Group
Click here to see how much of its profit Adtraction Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Adtraction Group reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Adtraction Group has delivered 3.2% dividend growth per year on average over the past three years.
Get our latest analysis on Adtraction Group's balance sheet health here.
To Sum It Up
Is Adtraction Group worth buying for its dividend? It's hard to get used to Adtraction Group paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Adtraction Group.
With that being said, if you're still considering Adtraction Group as an investment, you'll find it beneficial to know what risks this stock is facing. For example, we've found 2 warning signs for Adtraction Group that we recommend you consider before investing in the business.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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