Interested In MRS Logística's (BVMF:MRSA3B) Upcoming R$0.9522167 Dividend? You Have Four Days Left

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that MRS Logística S.A. (BVMF:MRSA3B) is about to go ex-dividend in just four days. The ex-dividend date is two business days before a company's record date in most cases, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Thus, you can purchase MRS Logística's shares before the 2nd of May in order to receive the dividend, which the company will pay on the 1st of January.

The company's upcoming dividend is R$0.9522167 a share, following on from the last 12 months, when the company distributed a total of R$0.99 per share to shareholders. Last year's total dividend payments show that MRS Logística has a trailing yield of 3.4% on the current share price of R$29.00. If you buy this business for its dividend, you should have an idea of whether MRS Logística's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. MRS Logística has a low and conservative payout ratio of just 24% of its income after tax. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. MRS Logística paid out more free cash flow than it generated - 176%, to be precise - last year, which we think is concerningly high. We're curious about why the company paid out more cash than it generated last year, since this can be one of the early signs that a dividend may be unsustainable.

While MRS Logística's dividends were covered by the company's reported profits, cash is somewhat more important, so it's not great to see that the company didn't generate enough cash to pay its dividend. Cash is king, as they say, and were MRS Logística to repeatedly pay dividends that aren't well covered by cashflow, we would consider this a warning sign.

View our latest analysis for MRS Logística

Click here to see how much of its profit MRS Logística paid out over the last 12 months.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see MRS Logística has grown its earnings rapidly, up 23% a year for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Unfortunately MRS Logística has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.

Final Takeaway

Is MRS Logística an attractive dividend stock, or better left on the shelf? We're glad to see the company has been improving its earnings per share while also paying out a low percentage of income. However, it's not great to see it paying out what we see as an uncomfortably high percentage of its cash flow. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of MRS Logística's dividend merits.

In light of that, while MRS Logística has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 3 warning signs for MRS Logística (1 is a bit concerning!) that you ought to be aware of before buying the shares.

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.