Just Four Days Till PARKEN Sport & Entertainment A/S (CPH:PARKEN) Will Be Trading Ex-Dividend
Readers hoping to buy PARKEN Sport & Entertainment A/S (CPH:PARKEN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is two business days before a company's record date in most cases, 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 at least 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 PARKEN Sport & Entertainment's shares on or after the 24th of April will not receive the dividend, which will be paid on the 28th of April.
The company's next dividend payment will be kr.10.00 per share. Last year, in total, the company distributed kr.10.00 to shareholders. Looking at the last 12 months of distributions, PARKEN Sport & Entertainment has a trailing yield of approximately 7.5% on its current stock price of kr.134.00. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately PARKEN Sport & Entertainment's payout ratio is modest, at just 42% of profit. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Over the past year it paid out 182% of its free cash flow as dividends, which is uncomfortably high. It's hard to consistently pay out more cash than you generate without either borrowing or using company cash, so we'd wonder how the company justifies this payout level.
PARKEN Sport & Entertainment paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Cash is king, as they say, and were PARKEN Sport & Entertainment to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.
Check out our latest analysis for PARKEN Sport & Entertainment
Click here to see how much of its profit PARKEN Sport & Entertainment paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings fall far enough, the company could be forced to cut its dividend. That's why it's comforting to see PARKEN Sport & Entertainment's earnings have been skyrocketing, up 34% per annum for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. PARKEN Sport & Entertainment's dividend payments are broadly unchanged compared to where they were eight years ago.
The Bottom Line
From a dividend perspective, should investors buy or avoid PARKEN Sport & Entertainment? We like that PARKEN Sport & Entertainment has been successfully growing its earnings per share at a nice rate and reinvesting most of its profits in the business. However, we note the high cashflow payout ratio with some concern. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
While it's tempting to invest in PARKEN Sport & Entertainment for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for PARKEN Sport & Entertainment that we strongly recommend you have a look at before investing in the company.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.