Ultimate Games S.A. (WSE:ULG) Looks Interesting, And It's About To Pay A Dividend
Readers hoping to buy Ultimate Games S.A. (WSE:ULG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. 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. Thus, you can purchase Ultimate Games' shares before the 30th of July in order to receive the dividend, which the company will pay on the 10th of August.
The company's next dividend payment will be zł1.00 per share, on the back of last year when the company paid a total of zł0.50 to shareholders. Based on the last year's worth of payments, Ultimate Games has a trailing yield of 3.3% on the current stock price of zł15.10. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Ultimate Games paid out a comfortable 41% of its profit last year.
Check out our latest analysis for Ultimate Games
Click here to see how much of its profit Ultimate Games 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Ultimate Games, with earnings per share up 8.6% on average over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Ultimate Games has delivered 5.2% dividend growth per year on average over the past seven years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Has Ultimate Games got what it takes to maintain its dividend payments? Earnings per share growth has been growing somewhat, and Ultimate Games is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Ultimate Games is halfway there. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
While it's tempting to invest in Ultimate Games for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 4 warning signs for Ultimate Games (2 make us uncomfortable!) that you ought to be aware of before buying the shares.
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.