New Zealand markets closed
  • NZX 50

    11,617.14
    +6.15 (+0.05%)
     
  • NZD/USD

    0.6347
    -0.0006 (-0.10%)
     
  • ALL ORDS

    7,369.40
    -53.80 (-0.72%)
     
  • OIL

    72.62
    +0.61 (+0.85%)
     
  • GOLD

    1,794.80
    -3.20 (-0.18%)
     

We Wouldn't Be Too Quick To Buy Patria Investments Limited (NASDAQ:PAX) Before It Goes Ex-Dividend

Patria Investments Limited (NASDAQ:PAX) 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Patria Investments investors that purchase the stock on or after the 1st of September will not receive the dividend, which will be paid on the 16th of September.

The company's upcoming dividend is US$0.17 a share, following on from the last 12 months, when the company distributed a total of US$0.71 per share to shareholders. Based on the last year's worth of payments, Patria Investments has a trailing yield of 4.9% on the current stock price of $14.37. 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 check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for Patria Investments

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Patria Investments paid out 107% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances.

When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

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. With that in mind, it's good to see earnings have grown 5.0% on last year.

One year is not very long in the grand scheme of things though, so we wouldn't draw too strong a conclusion based on these results.

We'd also point out that Patria Investments 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.

Given that Patria Investments has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Final Takeaway

From a dividend perspective, should investors buy or avoid Patria Investments? While we like that its earnings are growing somewhat, we're not enamored that it's paying out 107% of last year's earnings. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Patria Investments. Be aware that Patria Investments is showing 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here