ArcelorMittal S.A. (AMS:MT) is about to trade ex-dividend in the next 4 days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase ArcelorMittal's shares on or after the 15th of May will not receive the dividend, which will be paid on the 11th of June.

The company's next dividend payment will be US$0.275 per share. Last year, in total, the company distributed US$0.55 to shareholders. Based on the last year's worth of payments, ArcelorMittal has a trailing yield of 1.8% on the current stock price of €26.67. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Our free stock report includes 1 warning sign investors should be aware of before investing in ArcelorMittal. Read for free now.

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. That's why it's good to see ArcelorMittal paying out a modest 35% of its earnings. A useful secondary check can be to evaluate whether ArcelorMittal generated enough free cash flow to afford its dividend. It paid out 85% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

View our latest analysis for ArcelorMittal

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.ENXTAM:MT Historic Dividend May 10th 2025

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's not encouraging to see that ArcelorMittal's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. A payout ratio of 35% looks like a tacit signal from management that reinvestment opportunities in the business are low. In line with limited earnings growth in recent years, this is not the most appealing combination.

Story Continues

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. ArcelorMittal's dividend payments per share have declined at 0.9% per year on average over the past 10 years, which is uninspiring.

Final Takeaway

Is ArcelorMittal worth buying for its dividend? Earnings per share have been flat over the 10-year timeframe we consider, and ArcelorMittal paid out less than half its earnings and more than half its free cashflow over the last year. In summary, it's hard to get excited about ArcelorMittal from a dividend perspective.

While it's tempting to invest in ArcelorMittal for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for ArcelorMittal you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

View Comments