Kitwave Group plc (LON:KITW) Goes Ex-Dividend Soon
Readers hoping to buy Kitwave Group plc (LON:KITW) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Kitwave Group's shares before the 6th of April in order to receive the dividend, which the company will pay on the 28th of April.
The company's next dividend payment will be UK£0.068 per share. Last year, in total, the company distributed UK£0.07 to shareholders. Looking at the last 12 months of distributions, Kitwave Group has a trailing yield of approximately 3.4% on its current stock price of £2.7. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
View our latest analysis for Kitwave Group
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Kitwave Group paying out a modest 45% of its earnings. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out 20% of its free cash flow as dividends last year, which is conservatively low.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit Kitwave Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Kitwave Group's earnings have collapsed faster than Wile E Coyote's schemes to trap the Road Runner; down a tremendous 61% a year over the past five years.
We'd also point out that Kitwave Group issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Kitwave Group has delivered 43% dividend growth per year on average over the past two years.
Should investors buy Kitwave Group for the upcoming dividend? Kitwave Group has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. Overall, it's hard to get excited about Kitwave Group from a dividend perspective.
While it's tempting to invest in Kitwave Group for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for Kitwave Group and you should be aware of them before buying any shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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