AMCIL Limited's Dividend Paying Abilities Under Scrutiny Ahead of Ex-Dividend Date

AMCIL Limited (ASX:AMH) is set to pay a dividend of AU$0.055 per share on August 27th. However, last year the company paid out 104% of its profits as dividends, suggesting the dividend may not be sustainable. Additionally, AMCIL's earnings per share have remained flat over the past five years, and its dividend payments have not grown in the past 10 years. Investors should be cautious and demand a greater margin for safety when it comes to dividend sustainability.

AMCIL Limited (ASX:AMH) has announced that it will pay a dividend of AU$0.055 per share on August 27th. While the dividend is a positive for income investors, several factors suggest caution when evaluating the sustainability of these payments.

Last year, AMCIL paid out 104% of its profits as dividends, which indicates a high payout ratio. A high payout ratio can be a sign of unsustainability, particularly if earnings are not expected to grow significantly in the future. Additionally, AMCIL's earnings per share have remained flat over the past five years, and its dividend payments have not grown in the past 10 years. This stagnation in earnings and dividends raises concerns about the company's ability to maintain its dividend payments [1].

Investors should be cautious and demand a greater margin for safety when it comes to dividend sustainability. High payout ratios and stagnant earnings can be red flags for dividend investors. It is essential to consider other financial metrics and the company's overall health when evaluating an investment.

References:
[1] https://finance.yahoo.com/news/parex-resources-tse-pxt-announced-122828799.html