Yahoo Finance 2 Days To Buy Andrews Sykes Group plc (LON:ASY) Before The Ex-Dividend Date
Andrews Sykes Group plc (LON:ASY) stock is about to trade ex-dividend in 2 days time. Investors can purchase shares before the 10th of October in order to be eligible for this dividend, which will be paid on the 8th of November.
Andrews Sykes Group's next dividend payment will be UK£0.1 per share, on the back of last year when the company paid a total of UK£0.2 to shareholders. Calculating the last year's worth of payments shows that Andrews Sykes Group has a trailing yield of 4.3% on the current share price of £5.575. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Andrews Sykes Group can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Andrews Sykes Group
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. Andrews Sykes Group paid out 67% of its earnings to investors last year, a normal payout level for most businesses. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the last year, it paid out more than three-quarters (81%) of its free cash flow generated, which is fairly high and may be starting to limit reinvestment in the business.
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.
Click here to see how much of its profit Andrews Sykes Group 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 fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Andrews Sykes Group earnings per share are up 5.4% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Andrews Sykes Group's dividend payments per share have declined at 3.4% per year on average over the past ten years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
The Bottom Line
Should investors buy Andrews Sykes Group for the upcoming dividend? Earnings per share growth has been unremarkable, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear excessive. To summarise, Andrews Sykes Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.
Want to learn more about Andrews Sykes Group? Here's a visualisation of its historical rate of revenue and earnings growth.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
