Be Sure To Check Out Sphera Franchise Group S.A. (BVB:SFG) Before It Goes Ex-Dividend

Simply Wall St · 10/17 04:14

Readers hoping to buy Sphera Franchise Group S.A. (BVB:SFG) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. Therefore, if you purchase Sphera Franchise Group's shares on or after the 21st of October, you won't be eligible to receive the dividend, when it is paid on the 7th of November.

The company's next dividend payment will be RON01.05 per share. Last year, in total, the company distributed RON1.05 to shareholders. Looking at the last 12 months of distributions, Sphera Franchise Group has a trailing yield of approximately 2.5% on its current stock price of RON041.40. If you buy this business for its dividend, you should have an idea of whether Sphera Franchise Group's dividend is reliable and sustainable. As a result, readers should always check whether Sphera Franchise Group has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Sphera Franchise Group

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. Sphera Franchise Group paid out a comfortable 43% of its profit last year. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Over the last year it paid out 54% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Sphera Franchise Group'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.

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BVB:SFG Historic Dividend October 17th 2024

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Sphera Franchise Group's earnings have been skyrocketing, up 32% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, six years ago, Sphera Franchise Group has lifted its dividend by approximately 20% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

Has Sphera Franchise Group got what it takes to maintain its dividend payments? From a dividend perspective, we're encouraged to see that earnings per share have been growing, the company is paying out less than half of its earnings, and a bit over half its free cash flow. There's a lot to like about Sphera Franchise Group, and we would prioritise taking a closer look at it.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 2 warning signs with Sphera Franchise Group and understanding them should be part of your investment process.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.