Don't Race Out To Buy Antin Infrastructure Partners S.A. (EPA:ANTIN) Just Because It's Going Ex-Dividend
It looks like Antin Infrastructure Partners S.A. (EPA:ANTIN) is about to go ex-dividend in the next 3 days. The ex-dividend date generally occurs two days 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Antin Infrastructure Partners investors that purchase the stock on or after the 20th of October will not receive the dividend, which will be paid on the 22nd of October.
The company's next dividend payment will be €0.28 per share, on the back of last year when the company paid a total of €0.71 to shareholders. Based on the last year's worth of payments, Antin Infrastructure Partners has a trailing yield of 9.8% on the current stock price of €7.25. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Antin Infrastructure Partners paid out 111% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
See our latest analysis for Antin Infrastructure Partners
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's not encouraging to see that Antin Infrastructure Partners's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Antin Infrastructure Partners has delivered 45% dividend growth per year on average over the past five years.
Final Takeaway
From a dividend perspective, should investors buy or avoid Antin Infrastructure Partners? Earnings per share have not grown at all and Antin Infrastructure Partners is paying out an uncomfortably high percentage of its profit as dividends. Antin Infrastructure Partners doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.
So if you're still interested in Antin Infrastructure Partners despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. For example, we've found 1 warning sign for Antin Infrastructure Partners that we recommend you consider before investing in the business.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.