Interested In Saunders International's (ASX:SND) Upcoming AU$0.0075 Dividend? You Have Four Days Left

Saunders International Limited (ASX:SND) is about to trade ex-dividend in the next four days. This means that investors who purchase shares on or after the 16th of March will not receive the dividend, which will be paid on the 12th of April.

Saunders International's next dividend payment will be AU$0.0075 per share, on the back of last year when the company paid a total of AU$0.015 to shareholders. Last year's total dividend payments show that Saunders International has a trailing yield of 2.1% on the current share price of A$0.7. 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 check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Saunders International

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Saunders International has a low and conservative payout ratio of just 22% of its income after tax.

Click here to see how much of its profit Saunders International paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we're concerned to see Saunders International's earnings per share have dropped 9.9% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Saunders International has seen its dividend decline 9.3% per annum on average over the past 10 years, which is not great to see. While it's not great that earnings and dividends per share have fallen in recent years, we're encouraged by the fact that management has trimmed the dividend rather than risk over-committing the company in a risky attempt to maintain yields to shareholders.

Final Takeaway

Is Saunders International an attractive dividend stock, or better left on the shelf? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. Saunders International ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

In light of that, while Saunders International has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 2 warning signs for Saunders International that you should be aware of before investing in their shares.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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