Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that QANTM Intellectual Property Limited (ASX: QIP) is set to be ex-dividend in just three days. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is an important date to know, as any purchase of shares made on or after that date may mean a late settlement that does not appear on the record date. As a result, QANTM intellectual property investors who purchase the shares on or after September 1 will not receive the dividend, which will be paid on October 7.
The company’s next dividend payment will be A $ 0.034 per share, and over the past 12 months the company has paid a total of A $ 0.074 per share. Last year’s total dividend payouts show that QANTM’s intellectual property has a 6.4% return on the current share price of AU $ 1.165. If you are buying this company for its dividend, you should know if QANTM’s intellectual property dividend is reliable and sustainable. It is therefore necessary to check whether dividend payments are covered and whether profits are growing.
See our latest analysis for QANTM intellectual property
Dividends are generally paid out of company profits. If a company pays more dividends than it made a profit, the dividend could be unsustainable. QANTM’s intellectual property pays out only 9.1% of its after-tax profit, which is comfortably low and leaves plenty of leeway in the event of adverse events. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. Dividends consumed 58% of the company’s free cash flow last year, which is within a normal range for most dividend-paying organizations.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.
Click here to see how much of its profits QANTM Intellectual Property has paid in the past 12 months.
Have profits and dividends increased?
When profits fall, dividend companies become much more difficult to analyze and to safely own. If profits fall enough, the company could be forced to cut its dividend. QANTM Intellectual Property’s earnings per share have fallen by around 17% per year over the past five years. Ultimately, when earnings per share declines, the size of the pie from which dividends can be paid declines.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. QANTM’s intellectual property has generated an average annual increase of 0.5% per annum in its dividend, based on dividend payments over the past five years.
Is QANTM’s intellectual property an attractive dividend-paying stock, or better, is it left on the shelf? Earnings per share have declined significantly, although at least QANTM’s intellectual property paid less than half of its earnings and free cash flow over the past year, leaving some leeway. In summary, although it has some positive characteristics, we are not inclined to rush and buy the intellectual property of QANTM today.
That being said, if dividends aren’t your biggest concern with QANTM’s intellectual property, you should be aware of the other risks this business faces. Concrete example: we have spotted 1 warning sign for QANTM intellectual property you must be aware.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
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