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Aperam S.A. (AMS:APAM) is about to trade ex-dividend in the next 3 days. The ex-dividend date occurs one day 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Aperam investors that purchase the stock on or after the 11th of November will not receive the dividend, which will be paid on the 6th of December.
The company's next dividend payment will be €0.425 per share. Last year, in total, the company distributed €2.00 to shareholders. Looking at the last 12 months of distributions, Aperam has a trailing yield of approximately 8.0% on its current stock price of €25.02. If you buy this business for its dividend, you should have an idea of whether Aperam's dividend is reliable and sustainable. As a result, readers should always check whether Aperam has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Aperam
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. An unusually high payout ratio of 213% of its profit suggests something is happening other than the usual distribution of profits to shareholders. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Over the last year, it paid out dividends equivalent to 269% of what it generated in free cash flow, a disturbingly high percentage. It's pretty hard to pay out more than you earn, so we wonder how Aperam intends to continue funding this dividend, or if it could be forced to cut the payment.
As Aperam's dividend was not well covered by either earnings or cash flow, we would be concerned that this dividend could be at risk over the long term.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Aperam's earnings per share have fallen at approximately 23% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.