Readers wishing to buy Hunting automaton (LON: HTG) for its dividend will have to act shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for the payment of a dividend. It is important to know the ex-dividend date because any transaction in the share must have been settled by the registration date at the latest. This means that investors who buy Hunting shares from October 7 will not receive the dividend, which will be paid on October 29.
The company’s next dividend payment will be US $ 0.04 per share. Last year, in total, the company distributed US $ 0.08 to shareholders. Last year’s total dividend payouts show that Hunting has a rolling 2.6% return on the current share price of £ 2.255. Dividends are a major contributor to returns on investment for long-term holders, but only if the dividend continues to be paid. So we need to determine whether the hunt can afford its dividend and whether the dividend could increase.
See our latest analysis for the hunt
If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. The hunt paid a dividend last year although it was not profitable. This may be a one-time event, but it is not a long-term sustainable situation. Since the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If Hunting did not generate enough cash to pay the dividend, then he had to pay either cash in the bank or by borrowing money, which is not sustainable in the long run. The good news is that she has only paid out 13% of her free cash flow in the past year.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
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. If profits fall enough, the company could be forced to cut its dividend. Hunting recorded a loss last year, but at least the general trend suggests that its earnings have improved over the past five years. Even so, an unprofitable company whose business does not recover quickly is generally not a good candidate for dividend investors.
Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Hunting has seen its dividend drop by 8.4% per year on average over the past 10 years, which is not great to see.
Get our latest analysis on the health of Hunting’s toll here.
Does Hunting have what it takes to maintain its dividend payments? It’s hard to get used to Hunting paying a dividend despite a loss in the past year. However, at least the dividend was covered by free cash flow. While there are some good things to do, we are a bit ambivalent and it would take more to convince us of the merits of the Hunting dividend.
So if you want to do more research on hunting, you will find it worth knowing about the risks this stock faces. Concrete example: we have spotted 1 warning sign for hunting you must be aware.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
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 any of the stocks mentioned.
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