Should you buy Alpha Trust Mutual Fund and Alternative Investment Fund Management SA (ATH: ATRUST) for its upcoming dividend?

Alpha Trust Mutual Fund and Alternative Investment Fund Management SA (ATH:ATRUST) is set to trade ex-dividend in the coming days. The ex-dividend date occurs one day before the record date which is the day shareholders must be on the books of the company to receive a dividend. It is important to know the ex-dividend date, because any trade in the stock must have settled by the record date. This means that you will need to buy the shares of Alpha Trust Mutual Fund and Alternative Investment Fund Management by June 14 to receive the dividend, which will be paid on June 21.

The company’s next dividend payment will be €0.34 per share, after last year when the company paid a total of €0.50 to shareholders. Based on the value of last year’s payouts, Alpha Trust Mutual Fund and Alternative Investment Fund Management has a rolling yield of 9.9% on the current share price of €5.05. We love to see companies pay out a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our golden hen! That’s why we always have to check if the dividend payouts seem sustainable and if the business is growing.

Check out our latest analysis for Alpha Trust Mutual Fund and Alternative Investment Fund Management

If a company pays out more dividends than it has earned, the dividend may become unsustainable – a less than ideal situation. Fortunately, the payout ratio of Alpha Trust Mutual Fund and Alternative Investment Fund Management is modest at just 48% of earnings.

Generally speaking, the lower a company’s payout ratios, the more resilient its dividend tends to be.

Click here to see how much profit Alpha Trust Mutual Fund and Alternative Investment Fund Management has paid out over the past 12 months.

Have earnings and dividends increased?

Companies with consistently rising earnings per share tend to create the best dividend-paying stocks because they generally find it easier to increase dividends per share. If business goes into a recession and the dividend is cut, the company could see its value drop precipitously. It is encouraging to see that Alpha Trust Mutual Fund and Alternative Investment Fund Management has grown its profits rapidly, up 75% per year over the past five years.

Most investors primarily gauge a company’s dividend prospects by checking the historical rate of dividend growth. Dividend payouts per share of Alpha Trust Mutual Fund and Alternative Investment Fund Management have declined an average of 13% per year over the past eight years, which is uninspiring. It is unusual to see earnings per share increase at the same time as dividends per share decrease. We’re hoping that’s because the company is reinvesting heavily in its business, but it could also suggest that business is lumpy.

The essential

Are Alpha Trust Mutual Fund and Alternative Investment Fund Management attractive dividend stocks, or better left on the shelf? Typically, companies that grow rapidly and pay out only a small fraction of profits retain profits to reinvest in the business. This is one of the most attractive investment combinations according to this analysis, as it can create substantial value for long-term investors. In summary, Alpha Trust Mutual Fund and Alternative Investment Fund Management look promising as dividend stocks, and we suggest you take a closer look.

Although it is tempting to invest in Alpha Trust Mutual Fund and Alternative Investment Fund Management for dividends only, you should always be aware of the risks involved. To do this, you need to find out about the 3 warning signs we spotted with Alpha Trust Mutual Fund and Alternative Investment Fund Management (1 of which makes us a bit uneasy).

If you are looking for good dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and 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 financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.