In This Article:
Australian Clinical Labs Limited (ASX:ACL) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. This means that investors who purchase Australian Clinical Labs' shares on or after the 4th of September will not receive the dividend, which will be paid on the 27th of September.
The company's next dividend payment will be AU$0.09 per share. Last year, in total, the company distributed AU$0.12 to shareholders. Based on the last year's worth of payments, Australian Clinical Labs has a trailing yield of 4.0% on the current stock price of AU$3.00. 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! As a result, readers should always check whether Australian Clinical Labs has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Australian Clinical Labs
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. Australian Clinical Labs paid out 100% of its earnings, which is more than we're comfortable with, unless there are mitigating circumstances. 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. It paid out 13% of its free cash flow as dividends last year, which is conservatively low.
It's good to see that while Australian Clinical Labs's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.
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. If earnings fall far enough, the company could be forced to cut its dividend. Australian Clinical Labs's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 33% a year over the past five years.