ACTIA Group S.A. (EPA:ALATI) Will Pay A €0.12 Dividend In Four Days

ACTIA Group S.A. (EPA:ALATI) is about to trade ex-dividend in the next 4 days. The ex-dividend date is commonly two business days 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. Therefore, if you purchase ACTIA Group's shares on or after the 11th of September, you won't be eligible to receive the dividend, when it is paid on the 15th of September.

The company's next dividend payment will be €0.12 per share. Last year, in total, the company distributed €0.12 to shareholders. Based on the last year's worth of payments, ACTIA Group stock has a trailing yield of around 2.9% on the current share price of €4.16. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether ACTIA Group has been able to grow its dividends, or if the dividend might be cut.

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Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. ACTIA Group's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If ACTIA Group didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. What's good is that dividends were well covered by free cash flow, with the company paying out 5.6% of its cash flow last year.

See our latest analysis for ACTIA Group

Click here to see how much of its profit ACTIA Group paid out over the last 12 months.

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 earnings fall far enough, the company could be forced to cut its dividend. ACTIA Group was unprofitable last year, but at least the general trend suggests its earnings have been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, ACTIA Group has lifted its dividend by approximately 1.8% a year on average. Earnings per share have been growing much quicker than dividends, potentially because ACTIA Group is keeping back more of its profits to grow the business.

Get our latest analysis on ACTIA Group's balance sheet health here.

To Sum It Up

Should investors buy ACTIA Group for the upcoming dividend? We're a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. To summarise, ACTIA Group looks okay on this analysis, although it doesn't appear a stand-out opportunity.

While it's tempting to invest in ACTIA Group for the dividends alone, you should always be mindful of the risks involved. For example, we've found 3 warning signs for ACTIA Group (1 can't be ignored!) that deserve your attention before investing in the shares.

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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.