Spheria Emerging Companies Limited (ASX:SEC) Goes Ex-Dividend Soon

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Spheria Emerging Companies Limited (ASX:SEC) is about to go ex-dividend in just three days. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Spheria Emerging Companies' shares before the 14th of August in order to be eligible for the dividend, which will be paid on the 31st of August.

The company's next dividend payment will be AU$0.011 per share, and in the last 12 months, the company paid a total of AU$0.16 per share. Calculating the last year's worth of payments shows that Spheria Emerging Companies has a trailing yield of 6.7% on the current share price of AU$2.33. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Spheria Emerging Companies can afford its dividend, and if the dividend could grow.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Spheria Emerging Companies paying out a modest 48% of its earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Check out our latest analysis for Spheria Emerging Companies

Click here to see how much of its profit Spheria Emerging Companies paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's not ideal to see Spheria Emerging Companies's earnings per share have been shrinking at 4.0% a year over the previous five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last eight years, Spheria Emerging Companies has lifted its dividend by approximately 19% a year on average.

The Bottom Line

Is Spheria Emerging Companies worth buying for its dividend? Spheria Emerging Companies's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.

However if you're still interested in Spheria Emerging Companies as a potential investment, you should definitely consider some of the risks involved with Spheria Emerging Companies. Every company has risks, and we've spotted 3 warning signs for Spheria Emerging Companies (of which 1 is a bit concerning!) you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.