Camil Alimentos S.A. (BVMF:CAML3) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

It looks like Camil Alimentos S.A. (BVMF:CAML3) is about to go ex-dividend in the next 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a 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. In other words, investors can purchase Camil Alimentos' shares before the 28th of May in order to be eligible for the dividend, which will be paid on the 10th of June.

The company's next dividend payment will be R$0.0557068 per share. Last year, in total, the company distributed R$0.35 to shareholders. Calculating the last year's worth of payments shows that Camil Alimentos has a trailing yield of 3.6% on the current share price of R$9.79. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Camil Alimentos

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Camil Alimentos paid out a comfortable 36% of its profit last year. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 38% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Camil Alimentos'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.

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

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Camil Alimentos earnings per share are up 3.4% per annum over the last five years. Earnings per share growth in recent times has not been a standout. Yet there are several ways to grow the dividend, and one of them is simply that the company may choose to pay out more of its earnings as dividends.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past six years, Camil Alimentos has increased its dividend at approximately 14% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Is Camil Alimentos worth buying for its dividend? Earnings per share have been growing moderately, and Camil Alimentos is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but Camil Alimentos is being conservative with its dividend payouts and could still perform reasonably over the long run. Camil Alimentos looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Camil Alimentos has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 2 warning signs for Camil Alimentos (1 doesn't sit too well with us) you should be aware of.

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.