There's A Lot To Like About Profarma Distribuidora de Produtos Farmacêuticos' (BVMF:PFRM3) Upcoming R$0.163118 Dividend

Profarma Distribuidora de Produtos Farmacêuticos S.A. (BVMF:PFRM3) stock is about to trade ex-dividend in 3 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 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. This means that investors who purchase Profarma Distribuidora de Produtos Farmacêuticos' shares on or after the 1st of December will not receive the dividend, which will be paid on the 23rd of December.

The company's next dividend payment will be R$0.163118 per share, on the back of last year when the company paid a total of R$0.57 to shareholders. Based on the last year's worth of payments, Profarma Distribuidora de Produtos Farmacêuticos stock has a trailing yield of around 7.3% on the current share price of R$7.90. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

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. Profarma Distribuidora de Produtos Farmacêuticos is paying out an acceptable 61% of its profit, a common payout level among most companies. A useful secondary check can be to evaluate whether Profarma Distribuidora de Produtos Farmacêuticos generated enough free cash flow to afford its dividend. The good news is it paid out just 21% of its free cash flow in the 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.

Check out our latest analysis for Profarma Distribuidora de Produtos Farmacêuticos

Click here to see how much of its profit Profarma Distribuidora de Produtos Farmacêuticos paid out over the last 12 months.

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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Profarma Distribuidora de Produtos Farmacêuticos's earnings have been skyrocketing, up 57% per annum for the past five years. Management appears to be striking a nice balance between reinvesting for growth and paying dividends to shareholders. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Profarma Distribuidora de Produtos Farmacêuticos has delivered 21% dividend growth per year on average over the past four years. 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

Is Profarma Distribuidora de Produtos Farmacêuticos an attractive dividend stock, or better left on the shelf? Profarma Distribuidora de Produtos Farmacêuticos's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. There's a lot to like about Profarma Distribuidora de Produtos Farmacêuticos, and we would prioritise taking a closer look at it.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Our analysis shows 2 warning signs for Profarma Distribuidora de Produtos Farmacêuticos and you should be aware of these before buying any shares.

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.