Compagnie Financière Tradition SA (VTX:CFT) Looks Interesting, And It's About To Pay A Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Compagnie Financière Tradition SA (VTX:CFT) is about to trade ex-dividend in the next 3 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Compagnie Financière Tradition's shares on or after the 26th of May, you won't be eligible to receive the dividend, when it is paid on the 28th of May.

The company's upcoming dividend is CHF06.75 a share, following on from the last 12 months, when the company distributed a total of CHF6.75 per share to shareholders. Based on the last year's worth of payments, Compagnie Financière Tradition stock has a trailing yield of around 2.9% on the current share price of CHF0236.00. If you buy this business for its dividend, you should have an idea of whether Compagnie Financière Tradition's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are 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. Compagnie Financière Tradition paid out a comfortable 45% of its profit last year.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

View our latest analysis for Compagnie Financière Tradition

Click here to see how much of its profit Compagnie Financière Tradition paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see Compagnie Financière Tradition's earnings per share have risen 13% per annum over the last five years.

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, 10 years ago, Compagnie Financière Tradition has lifted its dividend by approximately 9.3% 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

From a dividend perspective, should investors buy or avoid Compagnie Financière Tradition? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Compagnie Financière Tradition looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Want to learn more about Compagnie Financière Tradition's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

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.