Is It Worth Considering Yduqs Participações S.A. (BVMF:YDUQ3) For Its Upcoming Dividend?

Readers hoping to buy Yduqs Participações S.A. (BVMF:YDUQ3) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase Yduqs Participações' shares before the 29th of April to receive the dividend, which will be paid on the 1st of January.

The company's upcoming dividend is R$0.5401167 a share, following on from the last 12 months, when the company distributed a total of R$0.54 per share to shareholders. Looking at the last 12 months of distributions, Yduqs Participações has a trailing yield of approximately 3.9% on its current stock price of R$13.93. If you buy this business for its dividend, you should have an idea of whether Yduqs Participações's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

We've discovered 4 warning signs about Yduqs Participações. View them for free.

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Yduqs Participações's payout ratio is modest, at just 46% of profit. 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 11% of its free cash flow last year.

It's positive to see that Yduqs Participações's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Check out our latest analysis for Yduqs Participações

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Yduqs Participações's earnings per share have fallen at approximately 8.5% 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. Yduqs Participações has delivered an average of 5.3% per year annual increase in its dividend, based on the past 10 years of dividend payments.

The Bottom Line

Is Yduqs Participações worth buying for its dividend? Yduqs Participações has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, it's hard to get excited about Yduqs Participações from a dividend perspective.

So while Yduqs Participações looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. To that end, you should learn about the 4 warning signs we've spotted with Yduqs Participações (including 1 which doesn't sit too well with us).

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.