Regular readers will know we love our dividends at Simply Wall St, which is why it’s exciting to see Mader Group Limited (ASX: MAD) is set to trade ex-dividend within the next four days. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is an important date to know, as any purchase of shares made on or after that date may mean a late settlement that does not appear on the record date. This means that you will have to buy Mader Group shares before September 6 to receive the dividend, which will be paid on September 28.
The company’s next dividend payment will be A $ 0.015 per share. Last year, in total, the company distributed AU $ 0.03 to shareholders. Based on the value of last year’s payouts, Mader Group shares have a rolling yield of around 2.6% on the current share price of $ 1.14A. Dividends are a contributor. major return on investment for long-term holders, but only if the dividend continues to be paid. That is why we should always check whether dividend payments seem sustainable and whether the business is growing.
See our latest analysis for Mader Group
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, then the dividend could be unsustainable. Mader Group paid a comfortable 31% of its profit last year. A useful secondary check may be to assess whether Mader Group has generated enough free cash flow to pay its dividend. In the past year, it has paid out 122% of its free cash flow as dividends, which is uncomfortably high. We’re curious as to why the company paid out more cash than it generated last year, as that can be one of the first signs that a dividend may be unsustainable.
Mader Group paid less dividends than it made profits, but unfortunately it did not generate enough cash to cover the dividend. If this were to happen again, it would pose a risk to Mader Group’s ability to maintain its dividend.
Click here to see how much of its Profits Mader Group has paid in the past 12 months.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold massively at the same time. It is encouraging to see that Mader Group has grown its profits rapidly, increasing 35% per year over the past three years. Profits have grown rapidly, but we’re concerned that dividend payments have consumed most of the company’s cash flow over the past year.
Many investors will assess a company’s dividend performance by evaluating how much dividend payments have changed over time. Mader Group’s dividend payments are actually stable compared to two years ago.
Is Mader Group an attractive dividend-paying stock, or better left on the shelves? We are happy to see that the company has improved its earnings per share while contributing a small percentage of its revenue. However, it’s not great to see him paying what we consider to be an uncomfortably high percentage of his cash flow. All things considered, we’re not particularly excited about Mader Group from a dividend standpoint.
So while Mader Group looks good from a dividend standpoint, it’s still worth being aware of the risks involved in this title. Our analysis shows 3 warning signs for Mader Group and you must know them before you buy stocks.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest 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. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is 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 documents. Simply Wall St has no position in the mentioned stocks.
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