Kamux Oyj (HEL:KAMUX) Is About To Go Ex-Dividend, And It Pays A 3.0% Yield

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Kamux Oyj (HEL:KAMUX) is about to trade ex-dividend in the next four days. 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 because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Kamux Oyj's shares on or after the 19th of April, you won't be eligible to receive the dividend, when it is paid on the 29th of April.

The company's upcoming dividend is €0.07 a share, following on from the last 12 months, when the company distributed a total of €0.17 per share to shareholders. Based on the last year's worth of payments, Kamux Oyj has a trailing yield of 3.0% on the current stock price of €5.76. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Kamux Oyj can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Kamux Oyj

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. Kamux Oyj paid out 71% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 26% of its free cash flow as dividends, a comfortable payout level for most companies.

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.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Kamux Oyj's earnings per share have fallen at approximately 8.0% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Kamux Oyj has delivered 6.0% dividend growth per year on average over the past six years. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

To Sum It Up

Is Kamux Oyj an attractive dividend stock, or better left on the shelf? The payout ratios are within a reasonable range, implying the dividend may be sustainable. Declining earnings are a serious concern, however, and could pose a threat to the dividend in future. All things considered, we are not particularly enthused about Kamux Oyj from a dividend perspective.

With that being said, if dividends aren't your biggest concern with Kamux Oyj, you should know about the other risks facing this business. In terms of investment risks, we've identified 1 warning sign with Kamux Oyj and understanding them should be part of your investment process.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.