Yahoo Finance Arvida Group Limited (NZSE:ARV) Is About To Go Ex-Dividend, And It Pays A 2.4% Yield
Arvida Group Limited (NZSE:ARV) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Arvida Group's shares before the 6th of December to receive the dividend, which will be paid on the 21st of December.
The company's next dividend payment will be NZ$0.012 per share, on the back of last year when the company paid a total of NZ$0.024 to shareholders. Based on the last year's worth of payments, Arvida Group has a trailing yield of 2.4% on the current stock price of NZ$0.98. If you buy this business for its dividend, you should have an idea of whether Arvida Group's dividend is reliable and sustainable. So we need to investigate whether Arvida Group can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Arvida Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Arvida Group paid out a comfortable 31% of its profit last year. 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. Thankfully its dividend payments took up just 33% of the free cash flow it generated, which is a comfortable payout ratio.
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 the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Arvida Group's earnings per share have fallen at approximately 5.9% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
We'd also point out that Arvida Group issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, eight years ago, Arvida Group has lifted its dividend by approximately 11% a year on average.
To Sum It Up
Has Arvida Group got what it takes to maintain its dividend payments? Arvida Group has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
In light of that, while Arvida Group has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 3 warning signs for Arvida Group (of which 1 is a bit unpleasant!) you should know about.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.
