Air Partner plc (LON:AIR) Looks Interesting, And It's About To Pay A Dividend
Air Partner plc (LON: AIR) will be trading ex dividend for the next three days. You can buy shares before October 15th to receive the dividend the company pays on November 20th.
Air Partner's next dividend payment will be £ 0.008 per share. In total, the company paid out £ 0.016 to shareholders last year. Looking at the last 12 months of distributions, Air Partner has a trailing return of approximately 2.5% versus the current share price of £ 0.648. Dividends are an important source of income for many shareholders, but the health of the company is critical to sustaining those dividends. Therefore, we should always check whether the dividend payments appear sustainable and whether the company is growing.
Check out our latest analysis for Air Partners
Dividends are usually paid out of corporate profits. So when a company pays out more than it earns, its dividend is usually at greater risk of being cut. Air Partner has a low and conservative payout ratio of just 11% of its after-tax income. However, cash flow is usually more important than profit in assessing the sustainability of dividends. So we should always check that the company has generated enough cash to be able to afford its dividend. What's good is that the dividends were well covered by free cash flow and the company paid out 5.6% of its cash flow last year.
It's good to see that the dividend is covered by both earnings and cash flow. This generally suggests that the dividend will be sustainable as long as earnings don't fall steeply.
Click here to see how much of their earnings Air Partner has paid out over the past 12 months.
historical dividend
Have profits and dividends grown?
Companies with steadily growing earnings per share generally make the best dividend stocks because they usually find it easier to grow dividends per share. Investors love dividends. So if earnings go down and dividends go down, expect a stock to sell heavily at the same time. Because of that, it's a relief that Air Partner's earnings per share have increased 4.8% per year over the past five years. The growth was anemic. However, with more than 75% of profits kept in business, there is plenty of room to reinvest in growth or increase the payout ratio - either of which could increase the dividend.
We would also like to point out that Air Partner issued a significant number of new shares over the past year. It's difficult to increase the dividend per share when a company is constantly creating new shares.
Many investors rate a company's dividend performance by rating how much dividend payments have changed over time. Air Partner's dividend payouts per share have decreased an average of 13% per year over the past 10 years, which isn't particularly inspiring. It's unusual for earnings per share to rise at the same time that dividends per share decline. We'd hope the company is reinvesting heavily in its business, but it could also suggest the business is lumpy.
Final takeaway
Should investors buy Air Partners for the upcoming dividend? Earnings per share grew moderately, and Air Partner is paying less than half of its earnings and cash flow as dividends. This is an attractive combination as the company invests in growth. We'd prefer earnings to grow faster, but the long-term best dividend stocks usually combine significant earnings per share growth with a low payout ratio, and Air Partner is halfway there. It is a promising combination that this company deserves closer attention.
With that in mind, you'd like to investigate what risks Air Partner is exposed to. For example, we found 6 warning signs for Air Partners (1 can't be ignored!) That deserve your attention before investing in the stocks.
However, we wouldn't recommend buying just the first dividend stock you see. Here's a list of interesting dividend stocks with a yield greater than 2% and an upcoming dividend.
This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. We want to provide you with a long-term, focused analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned.
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