Readers wishing to buy Arvida Group Limited (NZSE: ARV) for its dividend will have to act shortly, as the stock is about to trade ex-dividend. The ex-dividend date is a business day before a company’s registration date, which is the date the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you would not appear on the company’s books on the date of registration. Thus, you can buy Arvida Group shares before June 1 in order to receive the dividend, which the company will pay on June 10.
The company’s upcoming dividend is NZ $ 0.015 per share, after the past 12 months, when the company has distributed a total of NZ $ 0.053 per share to shareholders. Based on the value of last year’s payouts, Arvida Group has an ending yield of 2.9% on the current share price of NZ $ 1.83. Dividends are an important source of income for many shareholders, but the health of the company is crucial to sustaining these dividends. As a result, readers should always check whether Arvida Group has been able to increase its dividends, or if the dividend could be reduced.
See our latest analysis for the Arvida group
Dividends are usually paid out of company profits, so if a company pays more than it earned, its dividend is usually more at risk of being reduced. The Arvida Group pays only 22% of its after-tax profit, which is comfortably low and leaves a lot of leeway in the event of adverse events. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. The good thing is that dividends were well covered by free cash flow, with the company paying 25% of its cash flow last year.
It is positive to see that the Arvida Group dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a higher. large safety margin before the dividend is reduced.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with steadily increasing earnings per share are generally the best dividend-paying stocks because they generally find it easier to increase dividends per share. If business slows down and the dividend is reduced, the company could see its value drop precipitously. That’s why it’s heartwarming to see Arvida Group profits soar, up 21% per year over the past five years. Arvida group earnings per share grew like the Road Runner on a day of athletics; hardly stop even for a cheeky “beep-beep”. We also like the fact that it reinvests most of its profits in its operations. ”
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past six years, the Arvida Group has increased its dividend by around 32% per year on average. It’s great to see earnings per share grow rapidly over several years and dividends per share grow at the same time.
The bottom line
Is Arvida Group an attractive dividend stock, or is it better to stay on the shelf? We like the fact that Arvida Group is increasing its earnings per share while simultaneously paying a small percentage of its earnings and cash flow. These characteristics suggest that the company is reinvesting in growing its business, while the prudent payout ratio also implies a reduced risk of dividend reduction in the future. It is a promising combination that should mark this company worthy of special attention.
On that note, you’ll want to research the risks that the Arvida Group faces. We have identified 4 warning signs with Arvida Group (at least 2 not to be ignored), and understanding them should be part of your investment process.
If you are looking for dividend paying stocks, we recommend that you take a look at our list of top dividend paying stocks with a yield above 2% and a future dividend.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in any of the stocks mentioned.
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