Why you might be interested in Alpha Financial Markets Consulting plc’s (LON:AFM) upcoming dividend

Regular readers will know that at Simply Wall St we love our dividends, which is why it’s exciting to watch Alpha Financial Markets Consulting plc (LON:AFM) is trading ex-dividend for the next 3 days. The ex-dividend date is one day before the record date, which is the date that shareholders must be on the company’s books to receive a dividend. Knowing the ex-dividend date is important because every stock trade must be settled on or before the ex-dividend date. This means you can purchase Alpha Financial Markets Consulting stock before September 7th to receive the dividend the company will be paying on September 19th.

The company’s next dividend payment is £0.10 per share. Last year, the company distributed a total of £0.14 to shareholders. Total dividend payments over the last year show that Alpha Financial Markets Consulting has a trailing yield of 4.1% on the current share price of £3.5. If you buy this company for its dividend, you should have an idea whether Alpha Financial Markets Consulting’s dividend is reliable and sustainable. As such, readers should always check to see if Alpha Financial Markets Consulting has been able to increase its dividend or if the dividend may be cut.

Check out our latest analysis for Alpha Financial Markets Consulting

Dividends are usually paid from company profits. When a company pays out more dividends than it makes in profits, the dividend may not be sustainable. The company paid out 90% of its earnings as a dividend last year, which isn’t unreasonable but limits reinvestment in the company and leaves the dividend vulnerable to a business downturn. There could be cause for concern if profits start falling. However, cash flow is usually more important than earnings when assessing the sustainability of the dividend. As such, we should always check whether the company has generated enough cash to pay its dividend. Fortunately, only 43% of its free cash flow was paid out last year.

It’s encouraging to see that the dividend is covered by both earnings and cash flow. This generally suggests that the dividend is sustainable as long as earnings don’t fall abruptly.

Click here to see the company’s payout ratio and analyst estimates of its future dividends.

TARGET: Historical AFM dividend as of September 3, 2023

Have profits and dividends increased?

Stocks in companies that generate sustainable earnings growth often offer the best dividend prospects, since it’s easier to raise the dividend when earnings are rising. With earnings falling and the company forced to cut its dividend, investors could watch the value of their investment go up in smoke. It’s encouraging to see that Alpha Financial Markets Consulting has grown its earnings rapidly over the past five years, at a rate of 23% a year. The company pays out more than three-quarters of its earnings, but it’s also generating strong earnings growth.

Another important way to measure a company’s dividend prospects is to measure its historical dividend growth rate. Over the past six years, Alpha Financial Markets Consulting has increased its dividend by about 30% per year on average. It’s exciting to see that both earnings and dividends per share have grown rapidly in recent years.

summarize something

Is Alpha Financial Markets Consulting worth buying for its dividend? We like Alpha Financial Markets Consulting’s rising earnings per share and the fact that while the company has an average payout ratio, it pays out a lower percentage of its cash flow. Alpha Financial Markets Consulting looks solid overall on this analysis and we would certainly consider a closer look.

While it’s tempting to invest in Alpha Financial Markets Consulting for the dividends alone, you should always be aware of the risks involved. Every business has risks and we recognize them 1 warning sign for Alpha Financial Markets Consulting you should know that.

A common investing mistake is to buy the first interesting stock you see. Here you can find a complete list of high-yielding dividend stocks.

Assessment is complex, but we help make it simple.

Find out if Alpha Financial Markets Consulting might be over or under valued by viewing our comprehensive analysis Fair value estimates, risks and cautions, dividends, insider trading and financial health.

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This Simply Wall St article is of a general nature. We provide commentary based on historical data and analyst forecasts solely using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.