Unicasa Indústria de Móveis S.A. (BVMF:UCAS3) Pays A R$0.11 Dividend In Just Two Days

Unicasa Indústria de Móveis S.A. (BVMF:UCAS3) is about to trade ex-dividend in the next 2 days. If you purchase the stock on or after the 7th of December, you won't be eligible to receive this dividend, when it is paid on the 1st of January.

Unicasa Indústria de Móveis's next dividend payment will be R$0.11 per share, and in the last 12 months, the company paid a total of R$0.25 per share. Calculating the last year's worth of payments shows that Unicasa Indústria de Móveis has a trailing yield of 5.5% on the current share price of R$4.57. 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.

View our latest analysis for Unicasa Indústria de Móveis

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. Unicasa Indústria de Móveis paid out 139% of profit in the past year, which we think is typically not sustainable unless there are mitigating characteristics such as unusually strong cash flow or a large cash balance.

Click here to see how much of its profit Unicasa Indústria de Móveis paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 encouraging to see Unicasa Indústria de Móveis has grown its earnings rapidly, up 32% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Unicasa Indústria de Móveis's dividend payments per share have declined at 8.7% per year on average over the past eight years, which is uninspiring. Unicasa Indústria de Móveis is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

To Sum It Up

Has Unicasa Indústria de Móveis got what it takes to maintain its dividend payments? We're not enthused to see Unicasa Indústria de Móveis's dividend was not well covered by earnings over the last year, although it is great to see earnings growing. Unicasa Indústria de Móveis 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.

While it's tempting to invest in Unicasa Indústria de Móveis for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 2 warning signs for Unicasa Indústria de Móveis you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

If you decide to trade Unicasa Indústria de Móveis, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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