Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Focus Home Interactive Société anonyme (EPA:ALFOC) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 30th of September to receive the dividend, which will be paid on the 12th of November.
Focus Home Interactive Société anonyme's next dividend payment will be €0.3 per share. Last year, in total, the company distributed €0.3 to shareholders. Based on the last year's worth of payments, Focus Home Interactive Société anonyme stock has a trailing yield of around 1.2% on the current share price of €25.8. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Focus Home Interactive Société anonyme
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Focus Home Interactive Société anonyme is paying out just 20% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. A useful secondary check can be to evaluate whether Focus Home Interactive Société anonyme generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 17% of its cash flow last year.
It's positive to see that Focus Home Interactive Société anonyme's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Focus Home Interactive Société anonyme's earnings per share have been growing at 14% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination - plus the dividend can always be increased later.