Cruzeiro do Sul Educacional S.A. (BVMF:CSED3) Goes Ex-Dividend Soon

Cruzeiro do Sul Educacional S.A. (BVMF:CSED3) is about to trade ex-dividend in the next four days. The ex-dividend date is usually set to be two business days before the record date, which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Meaning, you will need to purchase Cruzeiro do Sul Educacional's shares before the 19th of December to receive the dividend, which will be paid on the 30th of December.

The company's next dividend payment will be R$0.2743163 per share, and in the last 12 months, the company paid a total of R$0.55 per share. Based on the last year's worth of payments, Cruzeiro do Sul Educacional stock has a trailing yield of around 9.3% on the current share price of R$5.93. If you buy this business for its dividend, you should have an idea of whether Cruzeiro do Sul Educacional's dividend is reliable and sustainable. So we need to investigate whether Cruzeiro do Sul Educacional can afford its dividend, and if the dividend could grow.

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If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year Cruzeiro do Sul Educacional paid out 94% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 10% of its free cash flow last year.

It's good to see that while Cruzeiro do Sul Educacional's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn.

View our latest analysis for Cruzeiro do Sul Educacional

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

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Cruzeiro do Sul Educacional's earnings per share have risen 12% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Cruzeiro do Sul Educacional has delivered an average of 43% per year annual increase in its dividend, based on the past four years of dividend payments. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

From a dividend perspective, should investors buy or avoid Cruzeiro do Sul Educacional? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Cruzeiro do Sul Educacional is paying out so much of its profit. To summarise, Cruzeiro do Sul Educacional looks okay on this analysis, although it doesn't appear a stand-out opportunity.

So while Cruzeiro do Sul Educacional looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 1 warning sign for Cruzeiro do Sul Educacional and you should be aware of this before buying any shares.

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.