Yahoo Finance Just Three Days Till Alpha Financial Markets Consulting plc (LON:AFM) Will Be Trading Ex-Dividend
It looks like Alpha Financial Markets Consulting plc (LON:AFM) is about to go ex-dividend in the next 3 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Alpha Financial Markets Consulting investors that purchase the stock on or after the 9th of December will not receive the dividend, which will be paid on the 22nd of December.
The company's next dividend payment will be UK£0.029 per share, on the back of last year when the company paid a total of UK£0.077 to shareholders. Based on the last year's worth of payments, Alpha Financial Markets Consulting has a trailing yield of 1.9% on the current stock price of £3.98. If you buy this business for its dividend, you should have an idea of whether Alpha Financial Markets Consulting's dividend is reliable and sustainable. As a result, readers should always check whether Alpha Financial Markets Consulting has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Alpha Financial Markets Consulting
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Alpha Financial Markets Consulting paid out a disturbingly high 215% of its profit as dividends last year, which makes us concerned there's something we don't fully understand in the business. 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. Over the last year it paid out 66% of its free cash flow as dividends, within the usual range for most companies.
It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Alpha Financial Markets Consulting fortunately did generate enough cash to fund its dividend. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. It's encouraging to see Alpha Financial Markets Consulting has grown its earnings rapidly, up 34% a year for the past five years.
Alpha Financial Markets Consulting also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. 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. Alpha Financial Markets Consulting has delivered an average of 27% per year annual increase in its dividend, based on the past four years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
The Bottom Line
Is Alpha Financial Markets Consulting worth buying for its dividend? Growing earnings per share and a normal cashflow payout ratio is an ok combination, but we're concerned that the company is paying out such a high percentage of its income as dividends. All things considered, we are not particularly enthused about Alpha Financial Markets Consulting from a dividend perspective.
If you're not too concerned about Alpha Financial Markets Consulting's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. For example, we've found 4 warning signs for Alpha Financial Markets Consulting that we recommend you consider before investing in the business.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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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.
