Don't Race Out To Buy Ouro Fino Saúde Animal Participações S.A. (BVMF:OFSA3) Just Because It's Going Ex-Dividend

Ouro Fino Saúde Animal Participações S.A. (BVMF:OFSA3) is about to trade ex-dividend in the next four days. The ex-dividend date is usually set to be one business day 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Ouro Fino Saúde Animal Participações' shares before the 30th of April in order to receive the dividend, which the company will pay on the 31st of May.

The company's next dividend payment will be R$0.336869 per share, on the back of last year when the company paid a total of R$0.55 to shareholders. Last year's total dividend payments show that Ouro Fino Saúde Animal Participações has a trailing yield of 3.1% on the current share price of R$21.70. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Ouro Fino Saúde Animal Participações has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Ouro Fino Saúde Animal Participações

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Ouro Fino Saúde Animal Participações's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If Ouro Fino Saúde Animal Participações didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. The good news is it paid out just 16% of its free cash flow in the last year.

Click here to see how much of its profit Ouro Fino Saúde Animal Participações paid out over the last 12 months.

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. Ouro Fino Saúde Animal Participações reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last nine years, Ouro Fino Saúde Animal Participações has lifted its dividend by approximately 12% a year on average.

Remember, you can always get a snapshot of Ouro Fino Saúde Animal Participações's financial health, by checking our visualisation of its financial health, here.

Final Takeaway

Is Ouro Fino Saúde Animal Participações worth buying for its dividend? It's hard to get used to Ouro Fino Saúde Animal Participações paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of Ouro Fino Saúde Animal Participações.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with Ouro Fino Saúde Animal Participações. To help with this, we've discovered 1 warning sign for Ouro Fino Saúde Animal Participações that you should be aware of before investing in their 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.