Is It Smart To Buy Quartix Holdings plc (LON:QTX) Before It Goes Ex-Dividend?
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Quartix Holdings plc (LON:QTX) is about to go ex-dividend in just two days. You will need to purchase shares before the 13th of August to receive the dividend, which will be paid on the 11th of September.
Quartix Holdings's upcoming dividend is UK£0.034 a share, following on from the last 12 months, when the company distributed a total of UK£0.12 per share to shareholders. Based on the last year's worth of payments, Quartix Holdings stock has a trailing yield of around 3.6% on the current share price of £3.4644. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Quartix Holdings has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Quartix Holdings
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. Quartix Holdings is paying out an acceptable 52% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Quartix Holdings generated enough free cash flow to afford its dividend. It distributed 37% of its free cash flow as dividends, a comfortable payout level for most companies.
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 the company's payout ratio, plus analyst estimates of its future dividends.
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. With that in mind, we're encouraged by the steady growth at Quartix Holdings, with earnings per share up 8.2% on average over the last five years. Decent historical earnings per share growth suggests Quartix Holdings has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. Therefore it's unlikely that the company will be able to reinvest heavily in its business, which could presage slower growth in the future.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, five years ago, Quartix Holdings has lifted its dividend by approximately 33% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is Quartix Holdings worth buying for its dividend? Earnings per share growth has been modest and Quartix Holdings paid out over half of its profits and less than half of its free cash flow, although both payout ratios are within normal limits. All things considered, we are not particularly enthused about Quartix Holdings from a dividend perspective.
On that note, you'll want to research what risks Quartix Holdings is facing. To that end, you should learn about the 2 warning signs we've spotted with Quartix Holdings (including 1 which is a bit unpleasant).
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
