close
close

Is Vogiatzoglou Systems SA (ATH:VOSYS) worth considering for its upcoming dividend?

Regular readers know that here at Simply Wall St we love paying dividends, which is why it’s so exciting to see Vogiatzoglou Systems S.A. (ATH:VOSYS) is set to go ex-dividend in the next 3 days. The ex-dividend date is the day before the record date, which is the day shareholders need to be on the company’s books to receive the dividend. The ex-dividend date is important because any transaction in the stock must settle before the record date to qualify for the dividend. This means you’ll need to buy Vogiatzoglou Systems shares before July 15th to receive the dividend, which will be paid on July 22nd.

The company’s next dividend payment will be EUR 0.145 per share, following last year’s payment to shareholders of EUR 0.15. Based on last year’s payments, Vogiatzoglou Systems shares have a yield of around 6.2% at the current share price of EUR 2.46. Dividends are a key driver of investment returns for long-term holders, but only if the dividend continues to be paid. We need to see if the dividend is covered by earnings and is growing.

See our latest analysis for Vogiatzoglou Systems

If a company pays out more in dividends than it earns, the dividend could become unsustainable – not an ideal situation. Vogiatzoglou Systems paid out 55% of its profits to investors last year, which is a normal payout level for most companies. However, cash flow is even more important than profits when assessing a dividend, so we need to check whether the company generated enough cash to pay the dividend. Dividends absorbed 59% of the company’s free cash flow last year, which is within the normal range for most dividend-paying organisations.

It’s positive that Vogiatzoglou Systems’ dividend is covered by both profits and cash flow, since this usually indicates that the dividend is sustainable and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much profit Vogiatzoglou Systems paid out over the last 12 months.

ATSE:VOSYS Historic Dividend July 11, 2024

Are profits and dividends growing?

Stocks that generate sustainable earnings growth often offer the best dividend prospects, as it is easier to raise the dividend when earnings are rising. If earnings fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. That’s why it’s a relief to see that Vogiatzoglou Systems’ earnings per share have grown by 6.6% per year over the past five years. While earnings have been growing at a credible rate, the company is paying out the majority of its profits to shareholders. If management raises the payout ratio even further, we would take that as a tacit signal that the company’s growth prospects are slowing.

Many investors judge a company’s dividend performance by looking at how much the dividend payments have changed over time. Vogiatzoglou Systems’ dividend payments per share have fallen by an average of 2.6% per year over the past 10 years, which is not very inspiring. It’s unusual to see earnings per share rising at the same time as dividends per share have fallen. Hopefully, this is because the company is reinvesting in its business, but it could also suggest that the business is unsustainable.

Summary

Should you buy Vogiatzoglou Systems for its dividend? Earnings per share have been growing modestly, and Vogiatzoglou Systems paid out just over half of its profits and free cash flow last year. In summary, it’s hard to get excited about Vogiatzoglou Systems from a dividend perspective.

If you want to take a closer look at Vogiatzoglou Systems, it’s worth knowing the risks the company faces. For example, we found that 3 warning signs for Vogiatzoglou Systems (1 we don’t like much!) which are worth paying attention to before investing in shares.

A common investment mistake is buying the first interesting stock you see. Here you can find full list of high yielding dividend stocks.

Valuation is a complicated process, but we help simplify it.

Find out if Vogiatzoglou Systems is potentially overvalued or undervalued by reading our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, internal transactions and financial condition.

See a free analysis

Have an opinion on this article? Concerned about the content? contact us with us directly. You can also email us at editorial-team (at) simplywallst.com.

This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Valuation is a complicated process, but we help simplify it.

Find out if Vogiatzoglou Systems is potentially overvalued or undervalued by reading our comprehensive analysis, which includes: fair value estimates, risks and warnings, dividends, internal transactions and financial condition.

See a free analysis

Have feedback on this article? Concerned about the content? Contact us directly. Alternatively, send an email to [email protected]