Only One Day Left To Cash In On Fleury's (BVMF:FLRY3) Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Fleury S.A. (BVMF:FLRY3) is about to trade ex-dividend in the next day or two. You will need to purchase shares before the 3rd of March to receive the dividend, which will be paid on the 2nd of April.

Fleury's upcoming dividend is R$0.49 a share, following on from the last 12 months, when the company distributed a total of R$0.93 per share to shareholders. Last year's total dividend payments show that Fleury has a trailing yield of 3.5% on the current share price of R$26.83. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Fleury can afford its dividend, and if the dividend could grow.

View our latest analysis for Fleury

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. Fleury distributed an unsustainably high 115% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious. 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. Fortunately, it paid out only 50% of its free cash flow in the past year.

It's good to see that while Fleury's dividends were not covered by profits, at least they are affordable from a cash perspective. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.

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. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Fleury earnings per share are up 9.8% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Fleury has increased its dividend at approximately 15% 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.

To Sum It Up

Is Fleury worth buying for its dividend? Earnings per share have grown modestly, and last year Fleury paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. All things considered, we are not particularly enthused about Fleury from a dividend perspective.

With that being said, if dividends aren't your biggest concern with Fleury, you should know about the other risks facing this business. For example, we've found 2 warning signs for Fleury (1 makes us a bit uncomfortable!) that deserve your attention before investing in the shares.

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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