Only Four Days Left To Cash In On Alexander Forbes Group Holdings' (JSE:AFH) Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Alexander Forbes Group Holdings Limited (JSE:AFH) is about to trade ex-dividend in the next 4 days. 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. In other words, investors can purchase Alexander Forbes Group Holdings' shares before the 15th of July in order to be eligible for the dividend, which will be paid on the 20th of July.
The company's next dividend payment will be R00.33 per share, on the back of last year when the company paid a total of R0.57 to shareholders. Based on the last year's worth of payments, Alexander Forbes Group Holdings stock has a trailing yield of around 7.6% on the current share price of R07.48. If you buy this business for its dividend, you should have an idea of whether Alexander Forbes Group Holdings's dividend is reliable and sustainable. So we need to investigate whether Alexander Forbes Group Holdings can afford its dividend, and if the dividend could grow.
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. Last year Alexander Forbes Group Holdings paid out 97% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.
When the dividend payout ratio is high, as it is in this case, the dividend is usually at greater risk of being cut in the future.
View our latest analysis for Alexander Forbes Group Holdings
Click here to see how much of its profit Alexander Forbes Group Holdings 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Alexander Forbes Group Holdings's earnings per share have risen 14% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Alexander Forbes Group Holdings has lifted its dividend by approximately 6.6% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Is Alexander Forbes Group Holdings worth buying for its dividend? Alexander Forbes Group Holdings has been generating credible earnings per share growth, although its dividend payments were not adequately covered by earnings. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
So if you want to do more digging on Alexander Forbes Group Holdings, you'll find it worthwhile knowing the risks that this stock faces. Our analysis shows 1 warning sign for Alexander Forbes Group Holdings and you should be aware of this before buying any shares.
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.