Orell Füssli AG (VTX:OFN) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Orell Füssli AG (VTX:OFN) is about to trade ex-dividend in the next three 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 Orell Füssli's shares before the 15th of May in order to receive the dividend, which the company will pay on the 19th of May.

The company's next dividend payment will be CHF04.40 per share. Last year, in total, the company distributed CHF4.40 to shareholders. Based on the last year's worth of payments, Orell Füssli has a trailing yield of 4.3% on the current stock price of CHF0101.50. If you buy this business for its dividend, you should have an idea of whether Orell Füssli's dividend is reliable and sustainable. So we need to investigate whether Orell Füssli can afford its dividend, and if the dividend could grow.

We've discovered 1 warning sign about Orell Füssli. View them 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. Orell Füssli paid out more than half (61%) of its earnings last year, which is a regular payout ratio for most companies. 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. Fortunately, it paid out only 47% of its free cash flow in the past 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 Orell Füssli

Click here to see how much of its profit Orell Füssli 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Orell Füssli's earnings per share have risen 11% per annum over the last five years. Orell Füssli is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, nine years ago, Orell Füssli has lifted its dividend by approximately 5.2% a year on average. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

To Sum It Up

Has Orell Füssli got what it takes to maintain its dividend payments? Orell Füssli'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 Orell Füssli, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Orell Füssli is facing. For example - Orell Füssli has 1 warning sign we think you should be aware of.

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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.