Yahoo Finance Why It Might Not Make Sense To Buy Accord Financial Corp. (TSE:ACD) For Its Upcoming Dividend
Accord Financial Corp. (TSE:ACD) stock is about to trade ex-dividend in day or two. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Therefore, if you purchase Accord Financial's shares on or after the 14th of August, you won't be eligible to receive the dividend, when it is paid on the 1st of September.
The company's next dividend payment will be CA$0.075 per share, and in the last 12 months, the company paid a total of CA$0.30 per share. Calculating the last year's worth of payments shows that Accord Financial has a trailing yield of 4.7% on the current share price of CA$6.4. 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 Accord Financial has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Accord Financial
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. Accord Financial's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Accord Financial paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
Click here to see how much of its profit Accord Financial paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Accord Financial reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Accord Financial's dividend payments per share have declined at 0.6% per year on average over the past 10 years, which is uninspiring.
Get our latest analysis on Accord Financial's balance sheet health here.
Final Takeaway
Has Accord Financial got what it takes to maintain its dividend payments? It's hard to get past the idea of Accord Financial paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
With that in mind though, if the poor dividend characteristics of Accord Financial don't faze you, it's worth being mindful of the risks involved with this business. Our analysis shows 3 warning signs for Accord Financial that we strongly recommend you have a look at before investing in the company.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
