Here's What We Like About Camil Alimentos' (BVMF:CAML3) Upcoming Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Camil Alimentos S.A. (BVMF:CAML3) is about to trade ex-dividend in the next day or so. You will need to purchase shares before the 9th of December to receive the dividend, which will be paid on the 18th of December.

The upcoming dividend for Camil Alimentos is R$0.41 per share, increased from last year's total dividends per share of R$0.16. If you buy this business for its dividend, you should have an idea of whether Camil Alimentos's dividend is reliable and sustainable. As a result, readers should always check whether Camil Alimentos has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Camil Alimentos

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. Camil Alimentos paid out just 15% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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. Luckily it paid out just 1.4% of its free cash flow last year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

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

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That's why it's comforting to see Camil Alimentos's earnings have been skyrocketing, up 28% per annum for the past five years. Camil Alimentos earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Camil Alimentos's dividend payments are effectively flat on where they were three years ago.

To Sum It Up

Has Camil Alimentos got what it takes to maintain its dividend payments? It's great that Camil Alimentos is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It's disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Camil Alimentos looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Camil Alimentos is facing. Our analysis shows 2 warning signs for Camil Alimentos that we strongly recommend you have a look at before investing in the company.

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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